Free Money To Buy Your First Home?!


Free money to buy your first home?!

Buying a home is expensive and the journey to building a house deposit is not for the faint hearted.  For many of us, our first house deposit will involve saving up more money than we ever have before, so we need all the help we can get.

So where should you begin? 

Most people don’t have the money to buy their first home outright, so they need a mortgage along with a house deposit.  Although there are some cases where you can buy a house with only a 5% deposit, it’s much more common to start with a 10% deposit. 

Before rushing into putting every penny you can into a house deposit, it’s best to have a bit of financial stability, meaning before you start saving for your deposit you should try to have a large emergency fund, for example six months of expenses. Life is full of unexpected surprises and it will sting that much more if you aren’t prepared.

Let’s get saving!

So now you are fully prepared and ready to start saving, you need to think about the best approach to saving for your deposit.  This is where the free money comes in, with the help of our ISA friends. 

An ISA is an individual savings account and there are a few different types of them.  The two ISAs that are helpful when buying a home for the first time are the Help to Buy ISA (HTB ISA) and the Lifetime ISA (LISA). 

ISAs are a great way to save your money tax-free, earn interest and, in the case of the HTB ISA and the LISA, receive free money from the government. It’s also a great way to isolate your savings from your other funds, making sure that this money is for your future home. 

Help to Buy ISA

The HTB ISA is a great option for first time buyers to save for their deposit and receive a government top up.  If you have a HTB ISA open already, well done you, as the scheme is now close to new accounts being opened.

This ISA is solely for first time buyers saving for their first home and with this account, you can contribute up to £200 per month and save a maximum of £12,000 overall. You can then claim 25% of your savings, up to £3000, from the government towards your purchase. Whilst you can’t contribute lump sums of money, the scheme is designed to help you manage your savings and build great saving habits.

The requirements for the use of the HTB ISA are that you must be a first time buyer, aged over 16 and the property must be in the UK and priced under £250,000, or £450,000 in London. You can only use the money in this account towards your purchase after £1,600 has been contributed.

The bonus is only able to be claimed between exchange and completion, meaning if you were planning to use the bonus to help with your deposit you may run into issues. 

You can no longer open a HTB ISA but you can still contribute, if you do have one, until November 2029 and claim the bonus until November 2030.

Lifetime ISA

If you didn’t open a HTB ISA in time, you can open a LISA instead. A LISA can be used towards the purchase of your first home or towards your retirement

You can deposit up to £4,000 a year with a bonus of 25%, meaning a maximum of £1,000 per year free money from the government.  There is no maximum overall amount set for this account, meaning if you open a LISA on your 18th birthday and contribute £4000 per year for 32 years, you would receive an overall maximum bonus of £32,000. 

Another major difference between the LISA and the HTB ISA, is that with a LISA, your contributions are added to your account annually, meaning you can earn interest on your bonus as well as your savings. 

With this account you must be a first time buyer, the property cannot exceed £450,000, and you must purchase the property at least 12 months after your first payment into the account. You also must be over 18 and make a payment before you are 40.


If you already have a HTB ISA and have been contributing for some time but wish to open a LISA and use that for your home purchase instead, you can. You can move over your money from your HTB ISA to your LISA without using up your annual allowance if done so within a year of opening one. 

However, you cannot move your money from a LISA to a HTB ISA without a 25% fee, as this is an unauthorised withdrawal. You cannot withdraw from your LISA without a fee unless it is for the purchase of your home or after you are 60 years old. 

Both ISAs are great tools for using free money to put towards your house deposit.

If you’re buying with another person…

Great news! Since ISAs are individual saving accounts that means couples, partners or two people that are buying a house together can each save individually and combine the two together, meaning two government bonuses.

Saving for a house deposit is a goal that many of our community are working towards and we need all the help we can get.  If you are saving for your first house deposit, do not leave free money on the table; make sure you use one of the ISA products as soon as possible.

Happy Saving!  

PS. Don’t forget you can also track your goals in the Goals section of the Financielle App.

By Laura Pomfret on November 12, 2021 / Build /
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