Lifetime ISA House Over £450k? Your 3 Options (2026)
Lifetime ISA house over £450k? After the Oct 2026 Budget the charge is 20%, not 25%. See what you lose, when withdrawing pays off and run your numbers free.
MONEY
10/28/20267 min read
Updated 28 October 2026 for the Autumn Budget: from 29 October 2026, using your Lifetime ISA to buy a first home over £450,000 costs a 20% charge, down from 25%. In plain English: you give back the government bonus, but you no longer lose any of your own money. The maths below uses the new rule.
You did everything right. You opened a LISA, paid in every year and watched the 25% bonus land. Then you started viewing houses around London and the South East, and every place that actually worked for your life came in at £475k, £485k, £499,950.
Below: what the new 20% charge actually costs you, when withdrawing is the smart call, when keeping your LISA still wins, and what the new First Time Buyer ISA means. There's a free calculator halfway down to run your own numbers.
Can you use a Lifetime ISA on a house over £450k?
Yes, but you lose the bonus. The £450,000 cap hasn't changed, and it applies across the whole UK, including London. At or under £450,000 you can use your LISA penalty-free. Over £450,000, the Budget cut the charge to 20% from 29 October 2026, which takes back the 25% bonus but leaves everything you paid in. Withdrawing for any other reason before age 60 still costs 25%.
The Lifetime ISA rules in 60 seconds
You can use your LISA penalty-free for a first home only if every one of these is true:
The price is £450,000 or less: the full agreed purchase price, not your share or your deposit.
You're a first-time buyer: you've never owned a home anywhere in the world.
Your first payment was 12+ months ago: counted from your first deposit, not from when you opened the app.
You're buying with a mortgage: cash buyers can't use it.
A conveyancer handles it: the money goes from your provider straight to your solicitor, never to you.
You complete within 90 days of your solicitor receiving the funds (extensions are possible).
HMRC hasn't yet published exactly how the new 20% route for homes over £450,000 will work in practice, for example whether it also has to go through your conveyancer. Ask your LISA provider and solicitor early, and we'll update this post when the guidance lands.
Buying as a couple?
The cap doesn't double. You can both use your LISAs and both bonuses, but the house itself must still cost £450,000 or less to avoid the charge. And penalty-free LISA money can only go towards the purchase price (including the exchange deposit), not stamp duty, solicitor fees or furniture.
Why so many first-time buyers get stuck between £450k and £500k
The cap hasn't moved since the LISA launched in April 2017, when the average UK house price was about £220,000. Prices have risen by roughly a third since then, and the Budget left the limit at £450,000 again. Had it tracked prices, it would sit at around £575,000 today.
The odd part? Other first-time buyer help stops at a different number. Stamp duty relief in England covers homes up to £500,000 (unchanged in the Budget): nothing on the first £300,000, then 5% up to £500,000. So a £485,000 home still gets first-time buyer stamp duty (£9,250), but it costs you your LISA bonus.
That £50,000 gap is exactly where a lot of buyers in Hertfordshire, the commuter belt and outer London end up.
Option 1: Withdraw anyway: what the new 20% charge costs
Before the Budget, the 25% charge was nastier than it sounded: it took back the bonus and 6.25% of your own money. The new 20% rate is set so it only takes back the bonus. You get back exactly what you paid in.
Say you paid in £8,000:
Government bonus (25%): £2,000
Balance: £10,000
New 20% charge: -£2,000 (it was -£2,500)
You receive: £8,000, which is every penny you put in.
Before you withdraw:
Growth is charged too. In a stocks and shares LISA, 20% also comes off any investment gains.
Check the process with your provider. Providers are still updating their systems for the new rule, so ask how they'll handle a withdrawal for a home over £450,000.
Allow time. Withdrawals can take days or weeks, and investments must be sold first. Don't leave it to exchange week.
It's a one-way door. Once you complete, you're no longer a first-time buyer, so the LISA can never be used for a home again.
When withdrawing your Lifetime ISA is worth it
Now that the charge only takes the bonus, the real question is: is the money worth more in your deposit today than as a bonus for age 60? If it pushes your deposit over a loan-to-value (LTV) line, the cheaper rate can easily beat the bonus you give up.
A worked example (rates are illustrative, so use your broker's real quotes):
House price: £480,000
Deposit without the LISA: £64,500 (13.4%) → 90% LTV mortgage of £415,500
Deposit with the £8,000 LISA money: £72,500 (15.1%) → 85% LTV mortgage of £407,500
Assumed rate difference: 4.60% vs 4.35% on a 35-year term
Interest saved: around £6,900 over a five-year fix
Against £2,000 of bonus given up, withdrawing wins comfortably, and you lose none of your own savings.
Now flip it. If the money doesn't get you over a band, it just trims the loan, saving perhaps £300 to £350 a year in interest. Over five years that's a bit less than the £2,000 bonus, so withdrawing doesn't pay off on interest alone, and keeping the LISA leaves the bonus growing for later life.
Rule of thumb: withdraw if the money crosses an LTV line or makes the purchase possible. If it doesn't, it's a close call, and keeping it for age 60 is a perfectly good choice.
Option 2: Keep your Lifetime ISA for retirement
If you don't touch it, your LISA quietly switches jobs: from house fund to retirement fund. It stays open after you buy. You can keep paying in and collecting the 25% bonus until you turn 50, and take everything out penalty-free from age 60. The Budget confirmed existing LISAs can carry on under today's rules, even after the product closes to new savers.
This suits you if your deposit is already solid without it. Three things to weigh:
Cash LISA? Consider moving it. Thirty-odd years is a long time to sit in cash. A proper ISA transfer to a stocks and shares LISA (not a withdrawal) avoids the charge.
It's locked until 60. Any withdrawal before then that isn't for a first home still costs 25%, so keep a separate emergency fund.
Check your workplace pension first. If your employer matches extra contributions, that match may beat the LISA bonus.
Option 3: Get the price down to £450,000
Sometimes the gap is closable. A home on at £465k with a tired kitchen, a weak survey or a lender down-valuation is a genuine negotiation. Tell the agent plainly that £450,000 unlocks your LISA bonus. A buyer with a clear reason for their number often lands better than one who just haggles.
The trap to avoid: splitting the price on paper. For example, agreeing £485k but writing it as £450k for the house plus £35k for "fixtures and fittings". Don't. Your solicitor reports the true price to your lender, HMRC can challenge inflated contents values, and a mis-stated price on a mortgage is a serious problem. Genuine extras at a fair second-hand value are fine; disguising the house price is not.
What the October 2026 Budget changed
The Autumn Budget on 28 October 2026 made three changes that matter here:
Lower charge above £450,000: from 29 October 2026, existing LISA holders buying a first home above £450,000 pay a 20% charge instead of 25%. You lose the bonus but keep your own money.
The £450,000 cap stays. It wasn't raised, and stamp duty thresholds didn't change either.
A new First Time Buyer ISA from April 2029: up to £4,000 a year, a 25% bonus paid when you buy (capped at £20,000 in total), a £450,000 price cap, no upper age limit, and no withdrawal charge -above the cap you simply don't get the bonus. It replaces the LISA for new savers; existing LISAs keep going, and you'll be able to use both towards the same home.
What this means for you: if you're buying over £450,000 now, using your LISA no longer costs you any of your own savings. The only question left is whether the bonus is worth more to you at 60 than in your deposit today.
Should you withdraw your Lifetime ISA? A 6-step checklist
Got an accepted offer above £450k? Work through these in order:
Can the price honestly come down to £450,000? Negotiate, and use your LISA with the bonus intact.
Do you need the money to buy at all? Withdraw, because you now get back everything you paid in.
Does it push you over an LTV line (90% → 85%, 85% → 80%)? Ask your broker for both quotes. If five years of savings beat the bonus, withdraw.
Is it a cash LISA you'd otherwise leave in cash for decades? Withdrawing for the house may be the better use.
None of the above? Keep it as a retirement pot, and consider switching cash to stocks and shares.
Withdrawing? Ask your provider and solicitor how the new 20% route works, request it weeks before exchange, and budget for receiving 80% of the balance.
Lifetime ISA over £450k: your questions answered
We both have LISAs. Does the cap become £900,000?
No. It's £450,000 for the property, however many LISAs are used.
Can I use my LISA over £450k and still get first-time buyer stamp duty relief?
Yes. They're separate. Stamp duty relief depends on the price (up to £500,000) and every buyer being a first-time buyer, not on your LISA.
Did the Budget raise the £450,000 cap?
No. The cap stays at £450,000 for both the LISA and the new First Time Buyer ISA. What changed is the charge above it: 20% instead of 25%, from 29 October 2026.
Can I use my LISA for the exchange deposit on a cheaper home?
Yes, penalty-free, as long as the home is £450,000 or under and completion happens within the 90-day window.
Should I keep paying into my LISA?
If you're under 40, it's still worth opening and using before the new ISA arrives in April 2029. The 25% bonus is generous, and above £450,000 you now only risk the bonus, not your own money. If you need flexibility for other goals, a regular ISA may suit you better (the cash ISA limit drops to £12,000 for under-65s from April 2027).
Map your money before you make the move
Buying is a hundred small money decisions. Grab the free one-page Money Map to plan your deposit, fees and LISA decision on a single page, or get the full LISA Calculator spreadsheet to compare every scenario with the new 20% rule.
Still building your deposit? Read How to budget without hating it: the Money Map method, then use the Zero-Based Budget Tracker to see how fast you can get there.
This post is general information, not financial advice. Rules can change, so check the latest with your LISA provider, mortgage broker and conveyancer before you act. Last updated 28 October 2026.
Sources: MoneySavingExpert: Budget 2026 Lifetime ISA · Which?: Autumn Budget 2026 · GOV.UK: Lifetime ISA · Nottingham Building Society · Moneybox · Setfords · MoneyWeek