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Two Lifetime Isa providers have been upping rates this week, amid a Budget that confirmed the account in its current form will be scrapped in the future.
Both Moneybox and Plum have been nudging their Lisa rates up by tiny fractions, as the providers battle for the best-buy account.
As it stands, Moneybox has the best rate of 4.69 per cent, with Plum* following close behind at 4.65 per cent.
Both rates include a 12-month boost, which means you might want to shop around for a better rate after the year’s up.
The Government announced several changes to Isas as part of its Budget, confirming it’s consulting on replacing the lifetime Isa with a simpler Isa designed specifically to help first-time buyers purchase a home.
Many experts have been calling for lifetime Isas to be reformed, specifically by hiking the maximum property purchase price up from £450,000 and making the penalty for accessing the money in an emergency less severe.
Turbocharged savings: Lifetime Isas can help you save for your first home quicker
Uncertainty about reform but top rates available
It’s not clear how existing lifetime Isa customers will be able to move to a replacement product.
‘Those using the account for retirement savings will want to know if they’re stuck in a legacy account, or if they are able to transfer to a different account.
‘Through this consultation process, the Government needs to make sure consumers come first and that the number one priority is for existing Lisa customers to get a good outcome,’ said Dan Coatsworth, head of markets at AJ Bell.
But if you’re comfortable with this uncertainty, are eligible for the account and will be buying your first property in the next few years, lifetime Isas can be a great option – beating the rates offered on other savings products.
A selection of the top Isas available – bonus rates are only available for new customers:
> Read more: The best Lifetime Isas
You can deposit up to £4,000 each tax year in your Lisa, which forms part of your overall £20,000 cash Isa allowance.
And when you factor in the 25 per cent Government bonus up to a maximum of £1,000 each year, the account can net you a nice return.
You should keep in mind lifetime Isas work best for first-time buyers who know they’re going to buy a property in the next few years.
Only those aged 18-39 can open one.
You can’t buy a property worth more than £450,000 using a Lisa.
Plus there’s a severe 25 per cent penalty if you need to withdraw for any reason other than to buy a home or for retirement – hence why you should be sure you want to buy a home.
This penalty hits your entire withdrawal amount, so you lose more than just the Government bonus.
SAVE MONEY, MAKE MONEY
4.56% cash Isa
4.56% cash Isa
Trading 212: 0.71% fixed 12-month bonus
Sipp cashback
Sipp cashback
£200 when you deposit or transfer £15,000
Top Isa without bonus
Top Isa without bonus
Straightforward 4.55% cash Isa with no boost
£100 cashback
£100 cashback
5% cashback on investments, up to £100
£20 gift card
£20 gift card
Hold £1,000 after three months in Plum’s cash Isa
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