NEW First Time Buyer ISA: What Is It and What Do We Know So Far?
TL;DR: The government is replacing the Lifetime ISA with a brand new ‘First Time Buyer ISA’, likely launching in April 2027. No age limit, no withdrawal penalty, and the bonus is paid at exchange. The bonus rate, annual savings limit, and property price cap haven't been confirmed yet though.
If you're saving for your first home, there's some big news worth knowing about. In June 2026, the government launched a consultation on a brand new savings product - the First Time Buyer ISA. It's designed to replace the Lifetime ISA and looks like a big step forward for anyone trying to get on the property ladder.
Here's the short version first, then the detail for those who want to dig in…
The short version
A new government-backed savings account for first-time buyers is coming, likely in April 2027. Like the Lifetime ISA, the government adds a bonus to your savings when you buy your first home. The key improvements are:
No upper age limit - unlike the Lifetime ISA, anyone over 18 can open one
No withdrawal penalty - you can access your own money without losing it
Bonus paid at exchange - right when you need it, not at completion
The big unknowns - the bonus rate, how much you can save each year, and the property price cap. These haven't been confirmed yet but are expected to be announced at a future Budget.
If you're a first-time buyer wondering whether to open a Lifetime ISA now or wait - that's genuinely worth talking through with a mortgage adviser before you commit either way.
First Time Buyer ISA: What Is It and What Do We Know So Far?
The full story…
What is the First Time Buyer ISA?
The First Time Buyer ISA (FTB ISA) is a new government-backed savings product designed specifically to help people save for their first home. Like the Help to Buy ISA and Lifetime ISA before it, the government tops up your savings with a bonus when you buy a qualifying property.
It's currently at consultation stage, with April 2027 looking like the likely launch date - though nothing is confirmed yet.
How is it different from the Lifetime ISA?
The Lifetime ISA has been around since 2017 and is the current go-to savings product for first-time buyers. But it's had some well-documented problems - particularly the 25% withdrawal penalty and the £450,000 property price cap that rules a lot of people out in more expensive parts of the country.
The FTB ISA is set to fix a number of these issues:
No upper age limit. To open a LISA you currently have to be under 40. The FTB ISA will remove that restriction so that anyone aged 18 or over can open one.
No withdrawal penalty. One of the biggest headaches with the LISA is that withdrawing money for anything other than a qualifying home purchase triggers a 25% charge that can eat into your own savings, not just the bonus. With the FTB ISA you can access your own money without an explicit penalty. That said, there's still an indirect consequence - the bonus is paid on net contributions, so if you withdraw money you'll get a smaller bonus when you buy. But you won't lose your own cash.
Bonus paid at exchange. The Help to Buy ISA paid the bonus at completion - too late to use at exchange. The LISA pays it monthly into the account. The FTB ISA will pay the bonus as a lump sum at exchange, which is exactly when you need it.
What do we still not know?
Honestly? Loads! The government has confirmed the broad shape of the product but left some major gaps:
The bonus rate - the LISA currently pays 25%. The FTB ISA bonus rate hasn't been announced yet.
The annual savings limit - how much you can pay in each year is still to be confirmed.
The property price cap - the LISA's £450,000 cap has been a major problem for buyers in more expensive areas. The FTB ISA cap hasn't been set yet. Martin Lewis of MoneySavingExpert has argued it would be "unthinkable" to set it lower than the current LISA limit.
These are expected to be announced at a future Budget or Spring Statement.
What about couples buying together?
There's no joint version - each person has their own FTB ISA. If two first-time buyers are purchasing together, both can open one and both can receive their own government bonus on their individual savings.
If one of you has owned a property before, only the first-time buyer in the couple can open an FTB ISA - but they can still use it towards the joint purchase.
What if I already have a LISA or Help to Buy ISA?
You can still open a LISA until 2027 and continue contributing after the FTB ISA launches. However, once the FTB ISA is available you won't be able to pay into both in the same tax year - you'll need to choose one!
Help to Buy ISA savings can be transferred into a FTB ISA. LISA savings cannot be transferred across, but you can use both a LISA and a FTB ISA towards the same property purchase if you have both.
One tip once accounts launch - open one early with a small amount to start the 12-month clock. You need the account open for at least a year before you can claim the bonus.
Should I open a LISA now or wait?
That depends on your timeline and your circumstances. If you're planning to buy soon, a LISA might still make sense - especially if the FTB ISA launch gets delayed or the bonus rate turns out lower than the LISA's 25%.
If you're earlier in your savings journey, it might be worth waiting until the key numbers are confirmed before committing.
This is genuinely one of those decisions where the right answer depends on your specific situation. As a mortgage broker on the Wirral working with first-time buyers every day, it's exactly the kind of question we help people think through - without the jargon and without any pressure.
The bottom line
The First Time Buyer ISA looks like a real improvement on the LISA no withdrawal penalty, no age cap, and the bonus paid at the right time. But with the key numbers still unconfirmed, it's too early to say definitively whether it'll be better than the LISA for everyone.
We'll keep this page updated as new details emerge. In the meantime, if you're a first-time buyer trying to figure out the right savings strategy alongside your mortgage options, we're always happy to have a conversation.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Sources: HM Treasury First Time Buyer ISA Consultation (GOV.UK), MoneySavingExpert First Time Buyer ISA Guide