What are the rules when using a LISA to apply for a mortgage with my partner?
15 November 2021
Question by Megan
If I apply for a mortgage with my partner on a joint borrower, sole proprietor basis (I.e. we’d be assessed together for mortgage affordability, and both take on the liability, but only he would own the house), could I then use my LISA as a first time buyer towards a subsequent purchase? Because I wouldn’t have actually owned any property previously, although I assisted with the purchase? Thanks!
Answered by Allie Llewellyn
Thank you for your question.
If you have had your Lifetime ISA for over a year, it can be used to purchase your first home, as long as you meet the following criteria:
- You are a first-time buyer and the property you're purchasing will be your home.
- The property is in the UK and priced at £450,000 or less
- You use a solicitor or conveyancer to act for you in the purchase
- You are purchasing the property with a mortgage
Whilst this sounds straightforward, determining if you qualify as a first-time buyer can become complex. There is limited guidance around what constitutes a first-time buyer, however, the most detailed description can be found here: https://www.helptobuyisaadmin.org.uk/sites/default/files/Help-to-Buy-ISA-Eligibility-of-FTBs.pdf.
Based on this description, you would likely retain your first-time buyer status if you are a joint borrower on the mortgage as long as this does not provide you with entitlement to possess or occupy the property. I would strongly recommend confirming with a solicitor before moving forward as you may be required to have this in writing.
One other consideration for you is whether being named on the mortgage would impact your stamp duty position. First-time buyers benefit from Stamp Duty relief when buying a property valued at £300,000 or less however this can be lost if you do not meet certain criteria. HMRC guidance states "Where an individual (who is not a spouse or civil partner of another purchaser) is one of the purchasers of a dwelling but they will have absolutely no beneficial interest in the property, they will not be treated as a joint purchaser of that dwelling. This would have to be evidenced in writing. Any future entitlement to capital proceeds from the sale of the property, to income or to occupy the property would mean that they do have a beneficial interest." Again, this is something I recommend you discuss with your solicitor.
I hope this helps answer your query,
All the best.
Allie is an Independent Financial Planner at Mazars LLP, based in the Birmingham Office, advising individuals and business owners. She works with her clients to deliver bespoke holistic financial planning advice to help them achieve their personal and financial goals throughout the different stages of life.