Martin Lewis has described the Lifetime ISA as 'the unbeatable way to save for your first home' and urged young people to start with just £1 on their 18th birthday. In a clip posted to Instagram, the money-saving expert told secondary school pupils that putting a single pound into a Lifetime ISA (LISA) in the first couple of days after turning 18 triggers the 12-month waiting period, even if they 'forget all about it'.
How the Lifetime ISA Works
Lewis explained that savers can contribute up to £4,000 per year into a LISA, and the government adds a 25% bonus on top, up to £1,000 annually. This bonus can be used towards a first home purchase or retirement after age 60. 'The big thing to understand about a Lifetime ISA is that you are allowed to save up to £4,000 a year in it. And if you do, the state adds 25% on top towards your first home,' Lewis said.
However, he highlighted a key restriction: the property purchased must be worth £450,000 or less. 'You can only use it to buy a property under £450,000. Some of you watching in Newcastle or somewhere in the north east will be thinking that's great. But those watching here in London might realise that a first-time property in London might cost you more than £450,000 – and, if you buy one over £450, there's a penalty,' he warned.
Starting Early Pays Off
The typical age of a first-time buyer in the UK is 34, a figure that has risen due to rising property prices and higher deposit requirements. Lewis emphasised that beginning to save early can help young people get ahead of that average. By depositing just £1 at age 18, the 12-month clock starts immediately. 'You'll soon get past that year without noticing, and then, if you suddenly need it later on – maybe you came into an inheritance, you came into some money another way, you can shove your cash in and then you can use it straight away to get your 25% bonus if it's right for you,' he said.
Key Requirements for Using a LISA
First-time buyers must meet several conditions to benefit from the scheme:
- First-Time Buyer: You must never have owned a home, residential interest in land, or inherited property anywhere in the world.
- Age Limits: You must be aged between 18 and 39 to open a LISA.
- Price Cap: The maximum purchase price for the property is strictly £450,000. This is the total price, not the amount you are borrowing.
- Usage: You must live in the property as your main residence. You cannot use a LISA to purchase a buy-to-let or holiday home.
- Mortgage Required: You must use a standard residential repayment mortgage; you cannot use a LISA for a pure cash purchase or buy-to-let mortgage.
- 12-Month Rule and Withdrawal Fee: It must be at least 12 months since your first payment into the LISA before you can withdraw funds without a penalty. Withdrawing for any purpose other than buying your first home or retirement at age 60 incurs a 25% government withdrawal charge, which wipes out the bonus and part of your own savings.
Combining LISAs for Couples
Young couples can accelerate their savings by pooling their LISAs. Both partners, if first-time buyers, can combine their individual accounts and bonuses to purchase a single property. For example, if each saves the maximum £4,000 per year, they receive a combined £2,000 government bonus annually, totalling £10,000. This can form a substantial deposit depending on the property type and location.
For more comprehensive information on setting up and managing a Lifetime ISA, Lewis directs savers to his website for a complete guide, including the best options for opening new accounts as of June 2026.
