First-time buyers with Lifetime ISAs buy their home four years earlier

Around one in six first-time buyers last year used a Lifetime ISA in their property purchase, with an average saving of £16,261 in their LISA at the time of purchase, according to research from Tembo.

These LISA funds made up an average of 37% of the total deposit amount, with the remaining sum coming from additional savings or gifts.

The research reveals a younger demographic for LISA users, with the average age being 29, in contrast to 33 for those not utilising a LISA. Income levels also differed, with LISA users having a household income of £41,336 on average, compared to the £66,000 average for non-LISA users.

First-time buyers without a LISA tended to have a larger total deposit, averaging £62,500, compared to the £43,859 for those using a LISA. Additionally, the average property prices were 13% higher for non-LISA users.

Despite concerns about the £450,000 house price ceiling for LISA purchases, Tembo’s extensive customer base over the past three years indicates that 97% of customers were buying homes within the LISA threshold.

Regarding the government bonus linked to LISAs, Tembo noted the average loan-to-value ratio for their LISA customers was 20.1%, including a £3,081 government bonus. Eliminating this bonus would lead to increased interest rates and additional interest costs over three years.

Richard Dana, founder and CEO of Tembo Money, commented on the importance of the LISA, “The Lifetime ISA is a really effective way for many buyers to reduce the time it takes to purchase their first home… the Lifetime ISA offers young people a great opportunity to access much needed additional funds to bolster their deposit.”