How one couple used their Lifetime ISA to become first time buyers

It’s such a milestone moment. Being handed the keys, going through the front door and walking into a home that’s yours. All yours. For many people, becoming a homeowner is an emotional and happy time. The first, and probably most important, step onto the property ladder.

It’s a warm feeling that Ashley and Katie are still basking in. At the start of 2024, they bought their first home after saving for a deposit using a Skipton Building Society Lifetime ISA. Having been together for six years, the couple were financially ready to buy. And with the Society’s help, they were able to secure a mortgage to make their dream come true.

“It’s such a good emotion,” beams Ashley. “It’s great to own your own home, and we really enjoy the freedom. We just feel proud knowing it’s all our hard work, and it’s paid off – because it’s all we’ve wanted.”

The journey to first time buyer

Getting to this point took time and financial commitments – which the pair admit weren’t always their priority. But having each taken out a Lifetime ISA when the product launched in 2017, they both took confidence from knowing their accounts were always there to come back to when they wanted.

“I first opened it with just £1 in it,” recalls Katie. “At that point in life, I thought ‘where am I going to find the money to top it up?’. And it was just there because I knew the rules mean you need to have it open for a year before you can use it for your first house. So just knowing it was there to use, when I needed it, was a help.”

Ashley admits, “I wouldn’t say I was bad with money, but I like spending it. I knew I wanted to buy a house. But every time I tried to save money I’d dip back into my savings. So when a Lifetime ISA came out, I knew I would have to commit my savings to it, and that I wouldn’t withdraw from it.”

A Lifetime ISA encouraged them both to have greater saving discipline, because of the withdrawal rules. You can’t withdraw from your LISA within the first 12 months of your first payment, without paying a 25% government charge. If you withdraw money for any other reason than to buy a first home, before you reach the age of 60, you’ll also have to pay a government charge. This means you would get back less than you pay in.

In return for saving money into a Lifetime ISA, the government pays you a 25% bonus on top of your contributions, up to a maximum of £1,000 every year. So if you take this route to saving for a first home, a Lifetime ISA can prove a rewarding approach. You can pay in a maximum of £4,000 each tax year. Add the government bonus on top, and you can build up £5,000 each tax year.

According to April 2024 research by Tembo, on average, first time buyers who have a LISA buy their home four years earlier that those who don’t have one. So using a LISA could help you get to where you want to be.

How to develop better savings habits

“I’d put a few hundred pounds a month away when I could,” adds Ashley. “I was living with my parents and wanted to move, especially when Covid happened and I was working from home in a box room. I remember thinking ‘I’m going to knuckle down and start paying into my Lifetime ISA now’. When I started building it up quickly, that’s when I thought ‘I’m getting on track here’.

“Then me and Katie were getting more serious, which spurred me onto save more.”

Katie was also living with her parents. She found saving into a Lifetime ISA motivating because of the government bonus. “It seemed almost too good to pass up, especially for something like buying your first house,” she reflects. “That extra £1,000 a year can be a massive help. At first, I was quite conscious to make sure I didn’t put money into my Lifetime ISA that I might need for something else. I would put in bits here and there when I could."

“As our relationship grew serious and we reached the point of knowing we wanted to live together, I began to make that greater commitment of putting money into my Lifetime ISA towards it."

“One day we realised that, between us, we had a decent bit of money saved – enough for a deposit. We had thought it was further out than it was.”

The £250 Lifetime ISA bonus for arranging a mortgage

After finding a home the couple fell in love with, they had an offer accepted and began to explore their mortgage options.

The positive experience of saving for their deposit with Skipton led to them deciding to arrange a mortgage appointment with the Society. Especially with the special incentive of knowing they could get an extra £250 bonus when the mortgage completes.

That’s because the Society’s Lifetime ISA customers are eligible for £250 cashback if they complete a Skipton mortgage (terms apply, which we cover below).

“It was so easy,” reveals Katie. “We went through a Decision in Principle meeting and we were booked in with an adviser, who was fantastic. She took so much time to go through everything. If we ever needed her, or had any questions about anything, she would always get back to us so quickly."

“We had the appointment on the Monday and our mortgage offer by the Friday.”

Ashley adds, “I don’t have a clue about anything to do with mortgages. But everything was looked after for us. I didn’t feel overwhelmed at any point. Buying a home is such a massive step, but sorting out the mortgage was actually the easiest process of the whole thing.”

The pride of owning a home

Having moved into their house in January, Ashley and Katie are enjoying making their home their own – and the independence they’ve gained.

“It’s such a massive change, but it’s amazing,” smiles Katie. “I couldn’t fault anything that we went through with the Lifetime ISA or the mortgage process. When we were each living with our parents and saving up, you sometimes feel like you’re never going to get there. But then all of a sudden it creeps up and you’re there.”

“The nice little cherry on top was the £250,” states Ashley. “When you’re buying a house, it feels like your money is floating away from you – so that £250 top-up was a nice feeling! It gets automatically paid into your bank account. You don’t need to anything. We used it to buy a nice piece of furniture for the house.”

So now they’ve reached the milestone of owning a house, what’s Ashley and Katie’s advice to other people who are saving for their first home? “I would say stick at it,” offers Ashley. “The Lifetime ISA is a really beneficial product for saving up for a deposit."

“We can also say from experience that the help Skipton offers makes such a difference. At the time, I couldn’t even tell you what I needed to do to start. They said they would talk us through it step by step, and that’s how it was, holding our hands.”

Katie concludes, “For us it was smooth sailing. They made it seem like nothing was too much trouble. They’d do the appointment whenever was suitable for us. We did look around at other mortgage interest rates and there might have been a better rate elsewhere. But because of how we were looked after when saving through our Lifetime ISA – and the extra bonus of £250 cashback – we felt it was worth being with Skipton.”