First cash Lifetime ISA introduced

Skipton Building Society has become the first savings provider to launch a cash Lifetime individual savings account (LISA), designed to help first time buyers save for a deposit, or for retirement.

Savers can open the LISA online with a minimum investment of £1. The account will pay an annual interest rate of 0.50%.*

Three other providers offer stocks and shares Lifetime ISAs, but Skipton is currently the only provider to offer a cash account.

First-time buyers who take out an account with the building society, and who then decide to take out a mortgage with them, either direct or via a broker, will also receive £250 cashback.

The LISA is available to anyone aged from 18 up to 40. Up to £4,000 can be saved into the account each year, and the government will boost any contributions you make by 25%.

According to calculations by the building society, a 25-year-old paying in the maximum annual allowance for eight years would end up an estimated pot of £40,777 by the age of 33 – more than the average first-time buyer deposit.

“The Lifetime Cash ISA could make a real difference to a new generation of savers by assisting them in getting a foot on the property ladder,” said Kris Brewster, spokesman for Skipton Building Society. “There isn’t a one size fits all approach to saving so it’s important people pause to think about their future and have a range of long-term options in mind – as well as reviewing these plans on a regular basis.”

Savings held in a LISA along with the bonus can be put towards a deposit on a first home costing up to £450,000. You must have had your Lifetime ISA for at least a year before you can take any money out.

Alternatively, savings can be withdrawn tax-free after the age of 60 and used for retirement. If you take out any money before the age of 60 and don’t use it to purchase a property, you’ll be hit with a 25% penalty.

*rates correct at 19.6.17