How does your Lifetime ISA match up to the average UK house deposit?

The Lifetime ISA has transformed the way many people take their first step on the housing ladder. According to HMRC, 56,900 account holders withdrew cash from their Lifetime ISA to purchase their first home in the 2023/24 tax year, with the average value of withdrawals up 8% year-on-year to just short of £15,000.

Lifetime ISA recap

The Lifetime ISA, launched in 2017, allows you to contribute up to £4,000 each year and get a 25% government bonus worth up to £1,000 on top. The funds in your account can either be used to buy a first property or to fund your retirement – if you wait until age 60.

It’s important to remember that you face a 25% exit charge if you withdraw funds for any other reason – which would not only strip out any benefit from the government bonus but might mean you get back less than your original contribution.

Another thing to think about, particularly when it comes to using a Lifetime ISA for a property purchase, is there is an upper limit of £450,000 on the value of said property.

While house price growth has slowed, the deposit required for first-time buyers in the UK is substantial. In England, analysis of data from banking industry trade body UK Finance suggests the average sum put down by someone buying their first home is nearly £62,000.

Big variation in first-time buyer deposit by region

There is considerable variation by region though and in this article, we consider how long it would take and how much you might have to put away to build a deposit for three different corners of Britain.

Like other types of ISA, Lifetime ISAs can be in either cash or stocks and shares. If you are looking to buy in the next three years or so you may want to concentrate on cash because you would lack the time required to ride out the ups and downs of the financial markets. However, if your time horizon is five years or more, then investing could help you achieve the goal of your dream first home more quickly.

Given you would not want to take undue risk with a pot you are using for such an important goal, we have assumed a conservative return from any investments of 4%. Annual investment charges of 0.75% are included. We’ve also assumed our aspiring homeowners are young enough that the cut-off at 50, when you no longer qualify for a bonus, is not relevant.

London an outlier

Looking at the data Greater London is a clear outlier – requiring, on average, a six-figure sum to get on the housing ladder – with this number likely to be inflated by some very high value transactions at the top end.

Source: AJ Bell, based on analysis of UK Finance mortgage survey data for Q2 2025

The South East requires, unsurprisingly, the next highest amount, at £76,770. Using the handy AJ Bell Lifetime ISA calculator (which helpfully factors in charges and shows you how much of the value of your pot is made up of contributions, the government bonus and growth) we can see that it would take more than 12 years to hit this sum if you contributed the maximum amount of £4,000 a year or £333 per month.

However, if you teamed up with a partner and you both maxed out your Lifetime ISA limit then you could get there in seven years.

At the other end of the spectrum, the average first-time buyer deposit north of the border is a little more than £30,000 which would take an individual less than six years, assuming you contributed £333 per month. If both you and a partner put in £200 per month you could achieve the sum required in five years.

Somewhere in the middle (in both geographic and monetary terms) is the West Midlands at £48,721. Getting to this total as an individual would require putting in the maximum amount allowed for eight-and-a-bit years. As a twosome you could do it in five years if you each contributed £299 per month.

Remember these are just illustrations and the average figures involved might be some way higher or lower than the deposit required for the property you’re eyeing as your first home. They do however illustrate what a useful tool the Lifetime ISA can be in achieving the goal of becoming a homeowner.