Compare the best lifetime ISAs
Discover how a lifetime ISA works, how to find the best lifetime ISA and more.
How do lifetime ISAs work?
A lifetime ISA allows you to collect free money from the government to spend either on buying your first home or funding your retirement.
It follows all the rules of traditional ISAs, meaning you’ll pay no tax on interest earned, and the amount you can deposit per tax year is capped.
However, on top of the interest paid, you’ll also earn a 25% bonus from the government on the first £4,000 you deposit per tax year. This bonus is available every year until you turn 50.
The catch is: the money can only be withdrawn after at least 12 months to help pay for your first property (worth up to £450,000) or after you turn 60 years old. If you decide to withdraw it in any other circumstances, you’ll face a 25% penalty (reduced to 20% until 5 April, in response to the Covid-19 pandemic).
Lifetime ISAs are available as cash ISAs or stocks and shares ISAs. You must be aged between 18 and 39 to open one.
How to find the best lifetime ISA?
The most important factor to consider when searching for a lifetime ISA is the interest rate paid. You can find the best interest rates by searching for lifetime ISAs on any price comparison website.
Customer service ratings might be of interest to you, but for most savers, this pales in comparison compared to the interest rates on offer.
Pros and cons of a lifetime ISA
- Earn tax free interest on your savings.
- A huge government bonus available every year until you turn 50.
- Available as a cash Isa or a stocks and shares Isa.
- You can only withdraw your funds in very specific circumstances, or you’ll face a 25% penalty.
- Only available to those aged between 18 and 39.
The government bonus on offer with lifetime ISAs is very generous, but you should be extremely sure you want to open one before you do. Withdrawals can only be made to buy your first home or fund your retirement, unless you’re willing to face a 25% fine.
More guides on Finder
Renault Kadjar insurance group
Find out which insurance group the Renault Kadjar falls under and how much it costs to insure.
ESG investing: Can investments help save the planet and make money?
Find out how your investments can contribute to saving the planet. Paid content.
How to invest in a volatile market: 3 strategies
Find out what you need to consider when investing in a volatile market and 3 popular strategies for doing so. Paid content.
How to invest in a falling market
Find out 5 key ways to invest in a falling or “bear” market. Paid content.
Best bridging loans: Compare rates and lenders
Learn how you can find the best bridging loan for your circumstances and discover more about the major UK lenders who offer them.
Compare the best equity release rates
If you’ve decided to release some of the equity in your home, we explain how to find the best providers and rates.
Compare the best 3 year fixed-rate bonds
Discover how to find the best fixed-rate bonds and how this compares to other savings accounts.
Compare the best 5-year fixed-rate bonds
Discover all you need to know about 5-year fixed-rate bonds, including how to find the best one for you.
Compare the best fixed-rate cash ISA
Discover how fixed-rate cash Isas work, how to find the best fixed-rate cash Isa and more.
Compare the best ISA rates for over-50s
If you’re over 50 looking for the best ISA rates, this guide will provide all the information you need
Ask an Expert