Saving for a first home: where to keep your deposit

Saving for a first-home deposit in the UK: Lifetime ISA rules and the planned First Time Buyer ISA, matching accounts to your buying date, and FSCS.

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Last checked: 14 October 2026. We check this page regularly against official sources.

A house deposit is often the biggest sum people have ever saved, and it usually has a rough deadline. That makes it a cash goal: the money needs to be there, in full, when you exchange contracts. This page sets out the main account types for a deposit and the things many first-time buyers weigh up.

This is general information and guidance, not personal financial advice. ClearRates is not authorised by the FCA to give advice, and we don’t cover mortgages.

Struggling with bills or debts right now? Free, confidential help is available from MoneyHelper’s debt advice locator, StepChange and Citizens Advice. Debts can also affect a mortgage application.

Keep your deposit and your emergency fund apart

Many buyers keep a separate rainy day pot alongside the deposit, usually 3 to 6 months of essential spending in easy access. Moving house brings surprise costs, and a buffer means the deposit doesn’t get raided for a broken boiler. Expensive debt is also worth looking at first: it usually costs more than savings earn.

The Lifetime ISA (LISA): how it works now

A cash Lifetime ISA can add a government bonus to a first-home deposit. The rules, from GOV.UK:

  • You must be 18 to 39 to open one, and you can pay in until you’re 50.
  • You can pay in up to £4,000 a year, and the government adds a 25% bonus (up to £1,000 a year). This counts towards your £20,000 overall ISA allowance.
  • For a first home, the property must cost £450,000 or less, you must buy at least 12 months after your first payment, use a conveyancer or solicitor, and buy with a mortgage.
  • Taking money out for any other reason (except at 60+ or if terminally ill) means a 25% withdrawal charge. That charge is bigger than the bonus, so you can lose some of your own savings.

Things to consider: how likely the price cap is to fit where you’re buying, and whether you can start the 12-month clock early enough. Compare cash Lifetime ISA rates. ClearRates lists cash LISAs only.

A replacement is on the way: the First Time Buyer ISA

The government plans to replace the LISA with a new First Time Buyer ISA. HM Treasury consulted on it from 22 June to 18 August 2026. As proposed, it would have no upper age limit, no withdrawal charge, and a bonus paid when you buy a first home with a mortgage.

What we know, as of 14 Oct 2026:

  • You can still open a LISA until the new product is available, and existing holders can keep saving into theirs under the current rules.
  • The bonus rate, yearly limit and price cap aren’t set yet. The Treasury says they’ll be announced at a future fiscal event. The next Budget is on 28 October 2026.

We’ll update this page after the Budget.

Match the account to your buying date

  • Buying within about a year, or date unclear: easy access keeps the money ready. Some accounts limit withdrawals, so check before you rely on one.
  • Fairly sure of the date: a fixed-rate bond or fixed cash ISA that matures before you expect to exchange. Most fixes don’t let you take money out early, or charge a penalty.
  • Saving from your pay each month: regular savers often pay high headline rates, but on a 12-month account you earn roughly half that rate on the money overall. See regular savers explained.
  • Cash ISA allowance: £20,000 across all ISAs in 2026/27. From 6 April 2027, the cash ISA limit is due to fall to £12,000 a year for under-65s.

Keep access as completion nears

Buying a home involves paying a deposit at exchange and the balance at completion, usually through your solicitor or conveyancer. In the last few months, many buyers move the deposit to an account they can withdraw from quickly. Things to check: notice periods, daily transfer limits, and how long a withdrawal from an app-only or platform account takes to arrive.

Is a large deposit protected?

The FSCS protects deposits up to £120,000 per person, per banking licence. A joint account is protected up to £240,000 for two people. Buying your main home is also a qualifying event for temporary high balance protection, up to £1.4 million for six months, if the FSCS’s conditions are met. See FSCS protection explained.

Work through the steps

What should I do with my savings? goes through a buffer, when you need the money and the ISA allowance. It is information, not a recommendation. MoneyHelper’s buying a home guides cover mortgages and buying costs.

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Written by ClearRates. General information, not personal financial advice. Rates change often, so check the provider’s terms before you apply. ClearRates may earn a commission from some links; this never affects how we rank rates. Last checked 14 Oct 2026.

Sources (all accessed 14 Oct 2026)

Questions

Can I still open a Lifetime ISA?

Yes, as of 14 Oct 2026. The government says it will remain possible to open a LISA until the new First Time Buyer ISA is available, and existing holders can keep paying in under the current rules.

What happens if the home costs more than £450,000?

Using LISA money for that purchase isn't an eligible first-home withdrawal, so the 25% withdrawal charge would apply.

Is a fixed-rate account a good place for a deposit?

It can suit money you're sure you won't need before the fix ends. The main risk is the purchase coming sooner than expected, when the money may be locked or face a penalty.

Can two of us each use a Lifetime ISA for the same home?

Yes. GOV.UK says buyers can each use their own LISA, as long as each person is a first-time buyer and the purchase meets the rules.

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