The First Time Buyer ISA: What to Do Now, and What to Leave Until 28 October

Linda Du
17 hours ago
5 min read

The First Time Buyer ISA does not exist yet, and nothing about it will be settled until the Budget on 28 October. But three other dates between now and next April do need a decision from you — and the Budget is the only one of them you can safely ignore.

Here is what to do, and by when.

First, which of these is you?

Buying your first home within about two years. You have something to do this month. Skip to the next section.

Buying in three years or more. You have nothing to do until 29 October. Read the Budget coverage then and decide with real numbers.

You already hold a Lifetime ISA. You have nothing to do at all. Your account continues under its existing rules indefinitely, and no announcement on 28 October changes that.

You were using a LISA as a retirement pot. Your existing account is untouched. What closes is the route in — the replacement is a first-home product only. Worth a proper pension comparison, with someone regulated to do it.

This month, if you're buying within about two years

Open a Lifetime ISA and make a payment into it.

Not because of the Budget. Because of a rule that has nothing to do with the Budget: a LISA cannot be used for a property purchase until twelve months after your first payment.

That clock starts on the day money first lands in the account, whatever the amount. It does not start when the replacement is announced, and no Budget can wind it back.

So the arithmetic is simple. Pay in this week, and the account becomes usable in the same week of 2027. Decide to "wait and see what happens on 28 October", and it becomes usable in late October 2027 instead. You have moved your own deadline by two months, and got nothing for it.

Before you do, check all four of these apply:

You are under 40 (the first payment must be made before your 40th birthday)
You are buying your first home
The property will cost £450,000 or less
You are buying with a mortgage

If any one of them fails, a LISA is the wrong product and this section doesn't apply to you.

The twelve-month rule is the only deadline here that gets worse the longer you think about it.

Before 5 April 2027: use this year's £4,000

The LISA allowance is £4,000 per tax year, and the government adds 25% on top, up to £1,000 a year. Unused allowance does not roll forward. Whatever you haven't paid in by 5 April 2027 is simply gone.

You do not have to find £4,000. Pay in what you can — the bonus is 25% of whatever you actually contribute, so £800 in the account is £200 you didn't have. Partial beats nothing, and nothing is what "I'll sort it in March" usually turns into.

If you opened an account this month on the strength of the section above, this is the same money doing two jobs: starting the clock and claiming this year's bonus.

On 28 October: read, don't act

The Budget is where the First Time Buyer ISA gets its numbers. Five of them are genuinely unknown until that day:

The bonus rate. The LISA and the Help to Buy ISA both paid 25%. Nothing commits the new product to that.
The annual subscription limit. The LISA allows £4,000. The Help to Buy ISA allowed £200 a month.
A lifetime cap on the bonus. The consultation asks directly whether there should be one. The LISA has never had one.
The property price cap. It will match the LISA's — but the number itself is unannounced.
The launch date. "As soon as practically possible."

There is nothing to do on the day, and nothing to prepare beforehand. The consultation closed on 18 August; there is no longer anywhere to send a view. If you are three or more years from buying, 29 October is when your decision actually starts.

One thing worth knowing now, because it removes a false panic: you can still open a Lifetime ISA. The consultation is explicit that until the new product exists, it remains possible to open a LISA and to keep saving into it under existing rules. Nothing shuts on 28 October.

On 6 April 2027: a separate change, same tax year

Unrelated to any of the above, and already decided: from 6 April 2027 the annual cash ISA limit falls to £12,000 for savers under 65. Those 65 and over keep £20,000. The overall £20,000 ISA allowance is unchanged. A flat 22% charge will also apply to interest paid on cash held inside a non-cash ISA.

Nothing to do about it today. But if you are holding a meaningful cash balance inside a stocks-and-shares ISA, that is the date to have in the diary, and this winter is when to think about it.

What not to do

Don't withdraw from a LISA early because you're worried about the changes. The charge is 25% of what you take out, not 25% of the bonus. Put in £4,000, receive the £1,000 bonus, withdraw the £5,000, and the £1,250 charge leaves you with £3,750 — you are down 6.25% of your own money. Speculation about an unannounced product is not worth that.

Don't wait for the Budget if you're buying soon. The twelve-month clock and the 5 April allowance both run regardless.

Don't open one "just in case". If you're genuinely unsure whether you'll buy, the exit is expensive. This is a product for people with a plan, not a hedge.

What Moola deliberately doesn't do

We won't put a number on the First Time Buyer ISA bonus. We could, and it would make a tidier post and a much better chart. But a projection built on a rate nobody has announced is a guess wearing a chart's clothes, and it is exactly the sort of thing people then make irreversible decisions on.

We don't model unannounced policy into your plan. Moola projects on the rules as they stand today. When 28 October produces real parameters, they go in.

We don't link you to a provider. There is no affiliate arrangement behind any product named here, and there won't be one.

We won't manufacture urgency. Three of the five dates above are "do nothing". If a piece of writing about this makes you feel you must act by Tuesday, check who benefits from that feeling.

Two real deadlines, one non-event, and a lot of noise in between.

The Moola take

Almost everything written about the First Time Buyer ISA right now is about a product that has no bonus rate, no contribution limit and no launch date. It is genuinely interesting and almost entirely un-actionable.

The actionable part is smaller and duller: if you are buying soon, twelve months is a real clock and £4,000 is a real allowance with a real expiry. If you are not, there is nothing to do until the end of October.

Which of those you're in depends on when you are actually buying — and that is a question about your own timeline, not about policy. Model the purchase you are actually planning, on the rules that exist today, and see whether two months moves anything.

This is information, not financial advice. If you are weighing a Lifetime ISA against a pension for retirement, speak to a regulated adviser.