LISA Bonus Calculator: what it shows and how to use it

A practical UK guide to the LISA Bonus Calculator and how to act on your results

Saving for your first home or for retirement can feel like climbing a mountain. But what if the government gave you a leg-up for every step you took? That's the idea behind the Lifetime ISA (LISA), and our free calculator is here to show you just how powerful that leg-up can be.

This guide will walk you through what a LISA is, how to use our handy LISA Bonus Calculator, and what to do with the numbers it gives you. Let's turn your savings goals into a clear, achievable plan.

What is a Lifetime ISA (LISA)?

A Lifetime ISA is a special type of savings account designed to help people in the UK save for their first home or for retirement. Think of it as a savings account with a fantastic perk.

Here’s the simple breakdown:

The Big Bonus: For every £4 you save, the government adds £1. This is a 25% bonus.
Annual Limit: You can save up to £4,000 each tax year.
Maximum Bonus: If you save the full £4,000, you'll get a £1,000 bonus from the government. That's £1,000 of free money every year.
Who can open one? You must be a UK resident aged between 18 and 39. You can contribute (and get the bonus) until you turn 50.
What can you use it for? You can use the money, including the bonus, to buy your first home (worth up to £450,000) or take it out tax-free after you turn 60 for retirement.

A word of warning: If you take money out for any other reason, you'll face a 25% penalty on the entire withdrawal amount. This means you'd lose your bonus and a chunk of your own savings.

Introducing the LISA Bonus Calculator

It's one thing to hear about a 25% bonus, but it's another to see what that means for your future savings pot. That's where our powerful tool comes in.

The LISA Bonus Calculator is designed to give you a clear projection of your savings journey. It takes your planned contributions and instantly shows you:

How much you'll save.
How much the government will give you in bonuses.
The total potential value of your LISA over time.

It cuts through the guesswork and gives you a personalised snapshot of your financial future, helping you see if your first home or retirement goals are on track.

How to Use the LISA Bonus Calculator: A Step-by-Step Guide

Our calculator is simple and takes less than a minute to use. You just need to enter four key pieces of information.

Calculator Inputs

Input	What it means
Initial Deposit (£)	The amount of money you plan to put in when you first open your LISA. This could be £0 if you're starting from scratch.
Monthly Contribution (£)	The regular amount you plan to save into your LISA each month. The calculator will cap your annual contributions at the £4,000 limit.
Assumed Growth Rate (%)	If you have a Stocks & Shares LISA, your money is invested and can grow (or shrink). This is an estimated annual growth rate. For a Cash LISA, you can enter the fixed interest rate. Remember, growth is not guaranteed.
Years to Save	The number of years you plan to contribute to your LISA. You can get the bonus on contributions until you are 50.

Understanding Your Results

Once you've entered your details, the calculator will instantly show you a breakdown of your future savings:

Total Contributions: The total amount of your own money you will have paid in.
Total Government Bonus: The total 'free money' the government will have added.
Total Estimated Growth: The potential growth from investments (for Stocks & Shares LISAs).
Projected Total Value: The final estimated value of your LISA pot. This is the key number for your savings goal!

Worked Example: Seeing the Calculator in Action

Let's meet Ben. He's 28 and wants to save for a deposit for his first flat in five years.

Here are Ben's details:

Initial Deposit: £2,000 (from his existing savings).
Monthly Contribution: £300.
Assumed Growth Rate: 4% (he's chosen a balanced Stocks & Shares LISA).
Years to Save: 5 years.

Ben enters these figures into the LISA Bonus Calculator. Here's what he sees:

Total Contributions: £20,000
Total Government Bonus: £5,000
Total Estimated Growth: £2,666
Projected Total Value: £27,666

In just five years, Ben could have over £27,000 for his deposit. The government's £5,000 bonus has given his savings a massive boost, getting him onto the property ladder much faster.

Common Mistakes to Avoid When Using a LISA

The LISA is a fantastic tool, but it's important to use it correctly. Avoid these common slip-ups:

Ignoring the Withdrawal Penalty: This is the big one. If you withdraw money for any reason other than a first home or retirement after 60, you pay a 25% charge on the whole amount. This means you get back less than you put in. For example, if you withdraw £1,000, the penalty is £250, so you only receive £750.
Exceeding the £4,000 Annual Limit: You only get the 25% bonus on the first £4,000 you save each tax year (from 6th April to 5th April). Any amount over this won't receive a bonus.
Forgetting the Property Price Cap: The LISA can only be used for a first home purchase up to a value of £450,000.
Waiting Too Long to Open One: You must be under 40 to open a LISA. If you're 39, open one with even just £1 to get your foot in the door, as you can keep contributing until you're 50.

Saving for a house deposit is a brilliant long-term goal. But what would happen to your plan if you were unable to work due to illness or injury? Protecting your income and your health is just as important as growing your savings.

While the LISA helps you build wealth, insurance helps you protect it. Two key types of cover to consider are:

Private Medical Insurance (PMI): This gives you fast access to diagnosis and treatment for eligible medical conditions. It's designed to cover acute conditions that arise after your policy begins. It's important to know that PMI in the UK does not cover pre-existing or chronic conditions like diabetes or asthma. To explore your options, you can learn more about private health insurance.
Life Insurance: This provides a cash lump sum to your loved ones if you pass away. It can help them pay off a mortgage or cover living costs, ensuring they are financially secure. Find out more about how life insurance can protect your family's future.

As expert brokers, WeCovr can help you compare policies and find the right cover for your needs. We can often offer discounts on other cover types if you take out a life insurance or PMI policy with us. Furthermore, WeCovr customers get complimentary access to CalorieHero, our cutting-edge AI calorie and nutrition tracking app, helping you stay on top of your health goals too.

Frequently Asked Questions (FAQ)

What's the difference between a Cash LISA and a Stocks & Shares LISA?

A Cash LISA is like a standard savings account; you earn a fixed rate of interest, so your money is not at risk. A Stocks & Shares LISA invests your money in the stock market. This offers the potential for higher growth but also carries the risk that your investments could fall in value.

Can I use the LISA for a property I plan to rent out?

No, the property you buy using your LISA must be your first home and you must intend to live in it. It cannot be used for a buy-to-let property.

What happens to my LISA if I don't buy a house?

If you don't use the money for a first home, it simply remains in the account as a retirement fund. You can continue contributing until you're 50 and then withdraw the full amount, tax-free, from the age of 60.

Can my partner and I both use a LISA to buy a home together?

Yes. If you are both first-time buyers, you can each open your own LISA and use both pots towards the deposit. This means you could potentially get a £2,000 government bonus each year between you.

Take the Next Step

Stop guessing and start planning. Take 60 seconds to see how much of a deposit you could build with a 25% government top-up.

Use the LISA Bonus Calculator now to map out your journey to your first home or a comfortable retirement.

And when you're ready to protect your financial future, speak to the experts at WeCovr for a no-obligation quote on life insurance or private medical insurance.