A Lifetime ISA (LISA) can be used to buy your first home, as long as it’s worth £450,000 or less, and you’re buying with a mortgage. If you buy a home with another first-time buyer, you can both use your Lifetime ISAs with the government bonus – but together you can buy a house only up to the value of £450,000.
You can also use the LISA to save for retirement, and can withdraw your LISA in full from the age of 60. However, if you save in a LISA rather than enrolling in a qualifying scheme, occupational pension scheme or personal pension scheme, you may lose the benefit of contributions by an employer (if any) and your future entitlement to means-tested benefits may be affected.
If you withdraw cash from your LISA for any other reason, except in the case of terminal illness, you’ll have to pay a 25% government withdrawal charge. This means that for every £100 you withdraw (the £80 you put in plus the £20 bonus), £25 would be deducted and you’d only get back £75 – less than the £80 you put in.