First cash Lifetime Isa launched

£20 note in a piggy bankImage copyright

Savers will be able to save cash into the government’s completely new Lifetime Individual Savings Account (Isa) for the 1st time through Thursday.

Skipton Building Society is actually launching a product with an interest rate of 0.5%.

Currently only three providers are offering the Lifetime ISA, nevertheless those require investment in shares.

Money saved in a Lifetime Isa is actually designed for buying a first home, or for retirement. The government offers savers a 25% annual bonus.

The accounts can be opened by savers aged between 18 along with 39.

Compared to various other cash Isas, the Skipton’s interest rate is actually relatively low. Rival providers of instant access Isas offer returns of more than 1%.

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“I might say that will’s a disappointing rate, nevertheless they know there’s going to be a big inflow, because of the government top-up,” said Simon French, chief economist at Panmure Gordon.

As a result, those who save before the end of the tax year will get an effective rate of return of 25.5% on up to £4,000.

However there are heavy penalties for withdrawing money through a Lifetime Isa if you do not buy a property, or if you take the money out before the age of 60.

The Skipton said that will anyone aged 25 who saved the maximum amount might have a pot worth £40,776 by the age of 33 – more than the average first-time buyer deposit.

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