Buying your first home with your Lifetime ISA
All that saving has finally paid off, take a look at the information below so that you are fully prepared when taking your first step onto the property ladder.
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Am I eligible?
When you have found your first home, you can use your Lifetime ISA element to help towards purchasing the property.
To do this you need to make sure you are eligible and that the property meets the terms as set out by HMRC. If any of the below are not met, the Government penalty will apply.
- ✔ You are a first time buyer
- ✔ The property is in the UK
- ✔ The property price is £450,000 or less
- ✔ It must be at least 12 months since the first payment into the Lifetime ISA
- ✔ You will be living in the property
- ✔ The property is purchased with a loan (mortgage)
- ✔ The amount encashed is not greater than the purchase price
- ✔ The purchase is of legal interest in land (for example not a houseboat)
How to access my Lifetime ISA
To access the money in your Lifetime ISA for the purchase of your first home, you will need to contact Customer Services so that they can provide you with the relevant forms and let you know the current value of your Lifetime ISA element.
You will receive two forms, the Lifetime ISA House Purchase Investor Declaration form, which you will need to complete and provide to your conveyancer; and the Lifetime ISA Conveyancer Declaration form, which your conveyancer will complete. Once both of these forms have been completed your conveyancer will send them to us.
You may also wish to check your Plan value which you can do by logging in to your online My Plans account.
Once we have received the forms, and we are happy with the information provided, we will make the payment of the requested encashment amount directly to your conveyancer. If the purchase of the home is completed within 90 days your conveyancer will inform us.
Please note if you are purchasing your first home with someone else and they have a Lifetime ISA then they will need to go through this process as well and your conveyancer will manage this. If your house purchase is not completed within 90 days of receiving the money, you can apply for a 60 day extension, and then another 30 days. However if the purchase still hasn’t gone through after this, the Lifetime ISA money must be returned to us otherwise the 25% Government penalty will apply.
Do I need to make a full encashment?
No, you choose how much of your Lifetime ISA element you would like to encash for your home purchase. You can make several encashments between the initial deposit and completion of the purchase, however HMRC rules require us to have the completed Investor Declaration and Conveyancer Declaration for every encashment.
What happens to my Lifetime ISA after the house purchase is complete
Once the purchase has been completed if you have money left over in your Lifetime ISA element, or you continue to make monthly contributions into your Lifetime ISA element, then it will remain open. You will receive the Government Bonus on contributions made up to the age of 50 and gain access to the money from your 60th birthday onwards (otherwise the Government penalty will apply).
If you encash the full value of your Lifetime ISA element, and you do not have a Direct Debit contributing to this element, your Lifetime ISA will close. If you plan to save for later on in life, then you may want to leave some money in the Lifetime ISA element.
