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A third of people don’t know what a Lifetime ISA is – or how it can help you buy your first home

Christina Hoghton
Written By:
Christina Hoghton
Posted:
Updated:
13/07/2022

Deposit savings up to £4,000 a year receive a 25% government bonus, which could boost your buying power significantly

Over a third (36%) of people don’t know what a Lifetime ISA (LISA) is, according to Hargreaves Lansdown.

The investment platform commissioned a survey through Opinium, which revealed that less than a quarter of people (24%) said they knew exactly what a LISA is.

A further 40% had heard of them but didn’t know what the benefits were.

What is a LISA?

Lifetime ISAs were introduced in 2017 to help young people save for a first home or for retirement. They are available to anyone aged between 18 and 40 and you can save up to £4,000 per year and receive a 25% top up bonus from the government.

You can save into a LISA until the age of 50 and access the money for the purpose of buying your first home or for retirement.

Mind the knowledge gap

Of the target age groups for Lifetime ISAs, 36% of 25–34-year-olds knew what one was compared to just a quarter (27%) of 18–24-year-olds.

Of those who are aware of LISAs, 35% of 25–34-year-olds say they have one compared to 28% of 18–24-year-olds.

A majority (54%) of 18–24-year-olds are using a LISA to buy their first property. Among 25–34-year-olds, 41% were using it for a property purchase, with 51% choosing it for retirement.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “LISAs are a great way for young people to save for a first home or retirement but five years after they launched not enough people know about them.

“Any savings up to £4,000 receive a 25% government bonus which over the course of a few years can give your house deposit or retirement fund a significant boost – yet only around one in three of the target group know exactly what a LISA is.

“LISAs have significant advantages over other products such as Help to Buy ISAs which also exist to help with house purchases. With Help to Buy you can only contribute up to £2,400 per year to get a 25% bonus topping you up to £3,000. They are also now no longer available to new customers. Over time we may see more people opt to transfer the balance of their Help to Buy ISAs into a LISA, which could boost awareness more widely.”