Lifetime ISA Rules – The Small Print | How Does a Lifetime ISA Work?

The Lifetime ISA rules are in place to protect you from making mistakes with your funds, and to keep the Lifetime ISA fair for everyone who uses them.

Lifetime ISA Eligibility

To be eligible for a Lifetime ISA* (LISA), you must be a UK resident, aged 18-39, and if you’re using it to buy your first home – you need to be a first time buyer.

Lifetime ISA Withdrawals

Some of the key Lifetime ISA rules are around withdrawals, so it's key to ensure you know how to withdraw safely to avoid penalties. 

When you’re ready to buy a house:

When you’re ready to buy a house, your solicitor or mortgage provider will need to request the transfer of your funds. Provided that you’re using the funds for a deposit on a house under £450,000 in value, it’s your first property and it’s in the UK – you will be able to withdraw the funds without facing any charges.

Don’t forget to ensure you have your representative request the money for you – or you may be subject to early withdrawal fees. You cannot withdraw to your own account before making your mortgage payment, or you’ll be subject to penalties.

Early Withdrawals:

You may face early withdrawal penalties if you withdraw your funds sooner than 12 months after you opened your Lifetime ISA, or if you need to withdraw them for something other than a deposit on a house, before you turn 60.

If you change your mind in the first 30 days after opening your Lifetime ISA, you have the right to cancel your application and get any funds back that you deposited in this time. If you’re transferring an account from another provider, you will still have a 30 day cancellation period, but the funds will be sent back to your previous provider if you are to cancel.

When Could Penalties be applied?

As well as early withdrawals, you’re also at risk of penalties if you attempt to buy a house with your Lifetime ISA, and you’re not a first time buyer. Anyone aged 18-39 can open a Lifetime ISA, but if you’re not a First Time Buyer, you can only use it to save for retirement.

You cannot use your Lifetime ISA funds to buy a property in cash, you must use them to put down a deposit on a mortgage. If you attempt to do so, you will also be at risk of facing penalties. The same goes for the value of the home you buy. If you withdraw your funds to use them on a house that costs over £450,000 in value (the Lifetime ISA limit), you will face penalties.

What penalties am I at risk of?

If you do not compare with the Lifetime ISA Rules, you’ll be at risk of losing 25% of your total savings – this includes your investment, bonuses and interest.


Unity Mutual don’t charge any management fees for maintaining your account. Provided you stick to the rule book, the numbers in your account should only go up!

Transferring a Lifetime ISA

If you want to transfer a LISA in from another provider, you’ll need to complete a transfer form. Provided you have less than the annual limit of £4,000 in your account, you’ll be able to transfer the full amount right away. If you have over £4,000 in your account, you can top up the full £4,000 annual limit and then continue to add the additional funds at the start of each financial year. You’ll need to instruct your previous provider each time you’d like to transfer funds into your new account.

You can also transfer funds from a Help to Buy ISA, or another ISA account into a LISA, and the same rules apply – this includes your Lifetime ISA being open for 12 months before you can use it. For example, if you were to have a Lifetime Open for 6 months with another provider, then transfer to us, and you’d like to withdraw it to buy your first home just 6 months later –you’re more than welcome to do so.

If you’d like to transfer your Unity Mutual LISA to another provider, you can contact the team to instruct us to do so and we’ll walk you through the process.

Lifetime ISA Age Limits

Once you turn 39, you won’t be able to open a Lifetime ISA, even if you want to use it for retirement rather than a home. Any funds you haven’t used on a deposit for your first home will continue to receive the government bonus until you turn 50.

Once you turn 50, the government bonus will no longer be applied. However, your account will continue to accumulate interest for the next 10 years.

When can I access my money?

You can access your money when you’re ready to put down a deposit on your first home, or whenever you’re ready to retire, after you’ve turned 60. If you’re not ready to take it out yet when you turn 60, you may choose to transfer your funds to another account; such as a Flexible ISA or a Guaranteed Investment Bond. Click here to learn more about our savings accounts and things to think about before choosing yours.


Thinking of opening an account?


If you’d like to learn more about opening a Lifetime ISA, click here.

For a deep dive into what makes a Stocks & Shares ISA, click here.


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