Newcastle BS  

Third cash Lifetime Isa launches

Third cash Lifetime Isa launches

Newcastle Building Society intends to launch a cash Lifetime Isa in the coming weeks, in a bid to support customers saving for a home or retirement.

The lender is only the third in the UK to launch the cash version of the product, joining Skipton Building Society, which launched its version in June 2017, and Nottingham Building Society, which launched its product in August.

The Lifetime Isa is offered more widely in a stocks and shares form, with Hargreaves Lansdown, OneFamily and Nutmeg offering the product amongst others.

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Lifetime Isas allow individuals aged between 18 and 40 to save up to £4,000 per year and receive a government bonus of 25 per cent towards a new home or pension.

More details regarding the products rates will be available closer to launch. 

Stuart Miller, customer director at Newcastle Building Society, said saving the maximum in a Lifetime Isa could earn savers £32,000 in free government bonuses.

He said: "We know how difficult it is for many people to save up enough of a deposit to allow them to own their own home. Similarly the importance of planning your finances ahead of retirement has never been more important.

"That is why Newcastle Building Society wants to be able to offer a Lifetime Isa."

Mr Miller said he hopes the government will continue the Lifetime Isa scheme, providing "consistent and long term" support to those who are saving for a home or planning for future retirement.

Earlier this year, the Treasury committee called for the Lifetime Isa to be abolished claiming it was too complex and not popular among savers.

Since then, providers have reiterated support for the scheme - with OneFamily criticising the rival Help to Buy Isa last month for delaying property purchases and misleading customers as to the circumstances under which their savings could be used.

The Help to Buy Isa offers a 25 per cent government bonus to a maximum value of £3,000 on money saved, but the additional funds can only be released at completion of the property transaction.

Bob Riach, principal at Riach Financial Advisers, said he believes a Lifetime Isa is the best option for many people because savers can contribute more to it, but he said the Help to Buy Isa also has its advantages.  

He said: "The Lifetime Isa rules mean you will have to wait at least a year before you can use one to buy a home. If you are buying quickly, go for a Help to Buy Isa not Lifetime Isa."

Mr Riach added: "You can open a Help to Buy Isa at age 16. You cannot open a Lifetime Isa until 18.

"So, for parents wanting to put money away for their children to buy a home in future, the Help to Buy Isa is the right vehicle and it can be transferred into a Lifetime Isa later."