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Can I use the full amount in my LISA for a house purchase after 1 year or just the amount that has been in for 12 months?

31 March 2022

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Question by Jean

Can I use the full amount in my LISA for a house purchase after 1 year or just the amount that has been in for 12 months? For example if I add £4k this April and receive my bonus can I use that amount when I buy a house in July despite it only being there for 3 months


Answered by Graham Wells

Hello Jean and thanks for your question - it's a good one!

The short answer is "yes", you can withdraw the full amount in your Lifetime Individual Savings Account (LISA), including any bonuses received. The '12 month rule' states that you must:

"buy the property at least 12 months after you make your first payment into the Lifetime ISA"

It's really just a way to deter people from opening a LISA purely to gain a bonus, when a planned house purchase is fairly imminent. As long as your first payment to the LISA was made at least a year before you make a withdrawal towards your first house purchase, it's fine. There are various other conditions, though. The government website states:

"Investors can make one single or several charge-free withdrawals from a Lifetime ISA for a first time residential purchase if:
- the purchase price of the residential property is £450,000 or less
- the withdrawal is less than the purchase price of the residential property
- the purchase is expected to complete within 90 days of withdrawing funds from a Lifetime ISA
- the Lifetime ISA investor will live in the property as their main residence
- the investor will purchase the property with a loan taken as a charge over the property for example a mortgage (excluding a ‘Buy to Let Mortgage’)
- when making their withdrawal, it’s at least 12 months since the investor made the first payment into the Lifetime ISA"

You can get more information about LISAs from the government website here: https://www.gov.uk/lifetime-isa

Hope this helps, Jean, and best wishes for your house purchase.

Graham


Answered by

Graham Wells

Financial Coach & Chartered Financial Planner

I love helping individuals and couples to develop financial knowledge, self-awareness and make bold, exciting plans for the future.