Savers looking to open a cash Lifetime Isa (Lisa) finally have a second option to choose from – but it’s not terribly different.
Nottingham Building Society has announced it plans to launch its own cash Lisa from 28 August. The product will come with 1% AER – exactly the same as Skipton’s.
- Should I open a Lifetime Isa?
The benefit of the Lisa comes from the 25% bonus paid by the government on top of what you save, on up to £4,000 annually. This bonus is contingent on you using the money to purchase a house for the first time or you can save for later life and withdraw money once you're aged 60 or over. Only people aged between 18 and 39 may open one, and you can pay money into a Lisa until you turn 50.
Anna Bowes, co-founder of savings advice site Savings Champion says: “Over a year after the launch of the Lisa and Skipton Building Society’s domination of the cash Lisa market, it’s great to see that Nottingham Building Society will finally be adding some competition, albeit among ongoing speculation that the Lisa is to be scrapped.
“However, disappointingly, it’s simply matching Skipton Building Society, offering an uninspiring 1% tax free/AER.”
- Generous bonus for first year's Lifetime Isa savers
Personal finance expert Andrew Hagger agrees: “It’s good to see another provider entering the Lisa space with a cash-based product – despite the lack of banks and building societies in this market, the Lisa remains a no brainer for many first-time buyers (FTBs).
“The Nottingham Building Society offering should prove attractive, not just because of the generous government bonuses, but because customers have the option to sit down and talk it through in branch plus get free whole of market mortgage advice as part of the deal.”
Initially, the product will only be available by booking in-branch appointments, but the building society says it plans to roll out online application by the end of the year.
Mr Hagger adds: “Online may be the channel of choice for simple products such as cash savings, loans and credit cards but when it comes to buying your first home, a bit of hand holding and guidance is as welcome to FTBs as is the 25% bonus that comes with the Lisa product.
“Skipton Building Society has been extremely successful with its cash-based Lisa and hopefully the Nottingham will follow suit and won’t be the last new player to enter this market.”
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However, the new product launches amid speculation that the government could ditch the Isa altogether. At the end of July, the Treasury Committee criticised the product as “complex and inconsistent”.
The Nottingham’s decision to launch the Lisa could be a lifeline, however.
Ms Bowes says: “It would be a shame to see this valuable tool removed from the Isa stable – and we hope that Nottingham’s move will inspire other providers to follow suit.”
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
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