New cash Lifetime Isa with market-leading rate of 1.4% launched
Aspiring first-time buyers have been given a boost as a new cash Lifetime Isa with a market-leading rate has been launched.
Money app Moneybox and OakNorth Bank have joined forces to offer the Moneybox Cash Lifetime Isa with a rate of 1.4%.
It is available through the Moneybox app and can be opened with £1.
Lifetime Isas, also known as Lisas, allow people to save for their first home or their retirement in the same pot, with the added help of a Government bonus.
Savers must be aged at least 18 years old but under 40 to open a Lifetime Isa.
They can put in up to £4,000 each year, until they are 50.
The Government will add a 25% bonus to the savings, up to a maximum of £1,000 per year.
People can have cash or stocks and shares in their Lifetime Isa, or hold a combination of both.
But many bigger brands have remained unconvinced about offering the accounts.
Providers which do offer cash Lifetime Isas include Newcastle Building Society, which pays a rate of 1.10%, as well as Skipton Building Society and Nottingham Building Society, which both pay 1%.
OakNorth Bank is covered by the Financial Services Compensation Scheme (FSCS) in the same way as the big high street banks – so customer deposits up to £85,000 are protected.
Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “It’s great news to see a new account launched to give consumers more choice – 1.4% is a market-leading rate in the cash Lisa market.”
There have been concerns that Lifetime Isas could discourage people from saving into pensions, where they could be better off over the longer term, and also that savers could potentially be hit by big charges for making withdrawals depending on the circumstances.
Generally, people can withdraw money from a Lifetime Isa if they are buying their first home; aged 60 or over or terminally ill, with less than 12 months to live. A 25% charge may be applied if savers withdraw cash or assets for any other reason.
Those behind the Moneybox Cash Lifetime Isa said it is designed to help customers who are saving for their first home.
The deal will also accept transfers in from people aged over 40 who already have Lifetime Isas with other providers.
Ben Stanway, co-founder of Moneybox, said: “The Lifetime Isa provides a much-needed helping hand to young people who are trying to get on the property ladder and we’ve been very surprised to see so few banks make it available to their customers.
“We hope that by offering a market-leading rate through our partnership with OakNorth Bank, we can encourage many more people to take advantage of the free money being offered by the Government.”