The one exception to this rule however is for buying a property. Provided you are a first-time buyer and are purchasing a property for less than £450,000, you are able to use the savings in your Lifetime ISA, including the bonus, to buy your first home without any penalty. This can be either the full balance of your ISA, or a partial amount. You will need to have been saving into your Lifetime ISA for at least 12 months before you are able to use the savings penalty-free, so keep this in mind when planning your purchase.
Rather than withdrawing the funds yourself, you will need to arrange for your conveyancer to apply for the money from the ISA provider as part of the conveyancing process. The funds would be paid upon the exchange of contracts, meaning you can use the full balance, including your bonus, towards the deposit on the property.
If you are buying a property in joint names with someone else, then you may both use your Lifetime ISAs to combine your savings and purchase the property together. The same caveat applies that you must both be first-time buyers to do so, however. If only one of you is a first-time buyer, then only that person can use their Lifetime ISA towards the property purchase without paying a penalty.
The Lifetime ISA can also be used in conjunction with other government housing initiatives, such as the Help to Buy equity loan scheme, and when purchasing a Shared Ownership property, making it a good way of purchasing a property no matter your circumstances. It may only be used for the initial purchase of the property itself however, meaning you cannot use the savings later down the line to re-pay the Help to Buy loan or increase your share in the property.
If you are planning on purchasing a property and have any queries about how to use your Lifetime ISA, please do not hesitate to contact us. Our conveyancing team are very familiar with the ISAs and would be more than happy to assist you.
For more information on Lifetime ISAs, the Government provide a guide which goes into more detail at the following link: https://www.gov.uk/lifetime-isa