Lifetime ISA query

betterdaysahead

Hi,
A family member of mine opened a Lifetime ISA a few months ago with a view to buying their first home late next year. They have put £4,000 in, which has been topped up by 25% to £5,000.

They know the LISA has to be open for 1 year before it can be used for buying their home to include the 25% bonus, and plan to buy very shortly after the year is up, so believed the maximum bonus they could get was £1,000 (the 25% on the £4,000 deposited).

However, I think they would be able to get another £1,000 bonus if they deposit another £4,000 at any point after the beginning of the next financial year next April, as my understanding is that the 25% bonus is paid the following month.

So overall, they would put have put £8,000 into the LISA in 2019/20 and 2020/21, but it would then total £10,000 towards their deposit, even though the account would only have been open for just over a year.

Can someone confirm my understanding is correct and that I haven't misunderstood anything and that the additional deposit into the LISA doesn't have to remain in the account for any minimum length of time prior to be used for the house purchase?

asm89

That's correct. There aren't any time stipulations other than the account being open for a year.

If deposited on April 6th, they wouldn't get the bonus until end of May though because the cut off is the 5th of each month, to receive the bonus in the same month. But they can start looking for properties from February/March to be honest.

Ben1989

You also don't need the LISA deposit until exchange of contracts so that buys some time also.

betterdaysahead

Brilliant - thank you both for your responses. Just wanted to make sure the information I was passing on was correct.