25 November, 2020
Introducing: a market-leading Lifetime ISA
We’re so excited to tell you that you can now open a market-leading Lifetime ISA in a few taps through the Multiply app.
A Lifetime ISA could help you buy your home sooner - it’s a must-have for eligible first-time buyers.
It pays a 25% government bonus on everything you save, up to £4,000 per tax year, plus you won’t pay any tax on the interest your savings earn.
We’ve partnered with Unity Mutual to bring you the market-leading Lifetime ISA, which pays 1.5% fixed-rate interest on your balance.
What’s a Lifetime ISA?
A Lifetime ISA (LISA) is an Individual Savings Account that helps you build your house deposit faster. It pays you a 25% government bonus on everything you save, up to £4,000 per tax year.
It’s designed to be used for purchasing your first home, or to use after you turn 60. That means you’ll lose the bonus if you use your Lifetime ISA savings for anything else.
It’s also a tax-efficient way to save, as you won’t pay any tax on the interest your savings earn.
Our recommended Lifetime ISA is the Unity Mutual Lifetime ISA paying 1.5% interest, which is the best rate on the market (true as of March 2021).
Is a Lifetime ISA right for me?
You’re eligible for a Lifetime ISA if you’re aged 18-39 and you’re planning to:
- Buy your first home for under £450,000;
- Take out a mortgage on your home; and
- Leave any funds in the account for at least a year
Or, if your plans change, you can access it penalty-free when you turn 60 and use it as part of your retirement income.
If you'd like help deciding if a Lifetime ISA is right for you, we'd recommend checking out the advice in the Multiply app.
Is it different to a Help to Buy ISA?
Yes - but they’re similar. The Help to Buy ISA is no longer available, although anyone who opened one before November last year can continue saving into it.
The Help to Buy ISA has more restrictions than the Lifetime ISA - you can only put £200 a month in, and outside London you can only use it on a home costing up to £250,000.
It also pays the 25% bonus at the point you buy your home, whereas with the Lifetime ISA the bonus is paid directly into your account each month. That means with the Lifetime ISA you can earn interest on the bonus as well as your savings.
Can I transfer over my existing ISA?
Yes - just head to the Lifetime ISA in the app and hit the "Transfer existing ISA" link. It takes 2 minutes to apply and we'll do the rest.
Why Unity Mutual?
We recommend the Unity Mutual LISA because this account currently pays 1.5% annual interest, which is the highest rate you’ll find anywhere (true as of December 2020)
They offer a Stocks & Shares LISA which looks and feels like a Cash LISA. Your interest payments are guaranteed and your capital is not at risk. This means that this account is no riskier than keeping your money in cash, but offers a better return than the best Cash LISA.
Unity Mutual is authorised and regulated by the FCA. Any money you save into this Lifetime ISA is protected by the FSCS scheme, without the usual cap of £85,000.
Founded in the UK in 1810, Unity Mutual has over 309,000 members across 121 branches nationwide. Being a mutual means that they are owned by their members and customers, not by shareholders.
How does unlimited FSCS protection work?
You might be used to seeing a FSCS limit of £85,000. Unity Mutual isn’t a bank or building society, so FSCS protection works a little differently for this Lifetime ISA, which offers unlimited protection without the usual cap.
Although this LISA behaves like a cash product (in that your interest payments are guaranteed and your capital is not at risk), the FSCS categorises it as a long-term insurance product.
That means you’d be covered for 100% of your claim with no upper limit, in the unlikely event that Unity Mutual went bust and you needed to get your money back.
What happens to the interest rate after 6th April 2022?
The interest rate is guaranteed at 1.5% until 5th April 2022.
Unity Mutual reviews the interest rate once a year, in March. Based on how the stock market has performed, they’ll decide what happens to the interest rate. Sadly, we can’t predict the outcome of that review!
What happens when I want to buy a home?
When you come to buy a home, the money in your Lifetime ISA is paid directly to your solicitor or conveyancer.
Just give us a shout once you’ve instructed a solicitor, and we’ll get the ball rolling. If you’re not sure when that’s meant to happen, check out the timeline in your app.
To use the bonus for your home, you’ll need to take out a mortgage and you must have had your Lifetime ISA open for at least 12 months.
You can open a Lifetime ISA in a few taps through the Multiply app. If you have any questions, give us a shout at email@example.com.