Does anyone have a Lifetime ISA?

[whigwham]

For my son's 18th birthday present, I was thinking of putting some money into a Lifetime ISA. I've read the gov.uk info about them, and the Money Savings Expert (MSE) web page. The promise of what is effectively a guaranteed 25% growth seems attractive. However, there were only a small number of recommended providers on MSE website, with no big name banks mentioned. Our current accounts are with Nationwide, which doesn't seem to offer LISAs. Are they unpopular? Is there any reason to be cautious about them? (For example, are they going to end up as a flash-in-the-pan investment option, like Child Trust Funds, suspended as soon as a different Government takes over, and then passed from pillar to post because the banks can't make any money out of them?)

Both my sons have a Lifetime ISA with Skipton Building Society called an ‘Online Cash Lifeline Isa Issue 2’ with a £4000 pa allowance. They’re very accessible and easy to use.

www.skipton.co.uk/savings/isas/lifetime-isa

We both have ours with Moneybox. Just about to use them for our first house and have a combined total bonus of £8,000 so I definitely recommend one.
If you’re going to use it to buy a house there are a couple of rules such as it has to be below £450k and you must have a mortgage.
Moneybox are brilliant in my opinion. Answer queries through the app very quickly and it’s a very intuitive interface. You can see very easily what you’ve paid in, what you’ve earnt and how much you need to max out your bonus each year.

LISA is brilliant, just be aware you only get the 25% if you buy a house or when you are 50 I think, have to check that. You also have to buy a house within a certain budget too, I've heard of people not being able to find a house in the right price range so maybe best to check depending where you live.

I had the help to buy isa which was the older version, I saved 4000 for my deposit and the 25% made it a 5000 deposit, I only ended up saving for about a year before we ended up buying

Yes, we live in London, so £450k won't buy more than a flat. And hopefully the max house price will rise with inflation over the next few years!

I have one with Moneybox, just about to use it to buy a house!

Ds(18) opened one with moneybox this year and will be feeding his ISA into it £4k a year for the next 5 years giving him a £5k addition to his house deposit pot.

I wonder if the £450k limit will rise with inflation. Have their been any indicators of that happening? There will be fewer properties for <£450k in 5-10 years when my DS may be buying.

I think the logic is that people who can afford £450k+ properties don't need government help to buy them.

If he puts money in the account and then finds that he wants to buy a property above the limit, whatever it is at the time, he has options:

Leave the money in and take it as a pension when he is old enough, using other savings as his mortgage deposit.

Or if he needs the money as part of his deposit, he can withdraw the money for a penalty of around 6%.

I understand that logic BarbaraOfSevelle, but whatever rationale was used to set the limit at £450k, rather than another number, should logically take inflation into account.

My parent's first home cost £4000 in the early 1970s, which seems a pittance now. And, significantly, inflation is now creeping into 1970s territory.

But house price inflation and inflation in general don't necessarily match up.

Inflation right now is fuelled by increases in costs of food, utilities and petrol. Going forward, we'll have higher interest rates coming into this mix. Or it will make lenders more cautious.

If we're all spending more of our money on heating, eating and getting to work, we'll have less money available to pay our mortgages, especially as borrowing money is getting more expensive.

All of the above feeds into downward pressure on property prices not upward.

I have one with Nutmeg. Seems to work just fine and they have options for ethical investing which is good.

My first home was above the cap, so although I had the previous version of a LISA I wasn't eligible for the 25% bonus, which made the account a poor investment. If I'd have known before hand a stocks and shares ISA would have been a better investment.

BarbaraOfSeville, it doesn't really matter what the level of inflation is, because my question was about the principle, not the specifics - any house price inflation at all will gradually erode the benefit of the £450k limit.

I think the short and accurate answer to my question is probably: "No, the Government has not indicated that the house price limit would rise with inflation, so that needs to be factored into the product's risk profile". But I'm interested to hear from anyone who might have heard otherwise.

I have one with AJ bell. I already have a house though so mine is for retirement. I think I thought it would be harder for the gov to change the rule about being able to take it at 60, compared to pensions which seem to have the rules changed on when you can take them all the time. We'll see if thats true though!

My vague retirement plan, if there's enough in the accounts, is to take whatever the tax free amount is from my pension (£12k a year?) and then top up with money from the LISA which will also be tax free. Only 30 though so will figure it out properly nearer the time!