Second cash Lifetime ISA to launch…but with limited scope
The Nottingham Building Society has announced it will launch its cash Lifetime ISA product next week – just the second product of its kind – but for now, it’s just available to locals.
Initially, the government-backed scheme for first-time buyers and pension savers will be available to those who can open the product at the mutual’s branch network from Tuesday 28 August.
It has 67 branches across 11 counties: Bedfordshire, Cambridgeshire, Derbyshire, Hertfordshire, Leicestershire, Lincolnshire, Norfolk, Northamptonshire, Nottinghamshire, Staffordshire and South Yorkshire. However, it’s now accepting bookings for appointments at its branches.
An online version of the scheme is expected to go live before the end of the year but anyone wanting to register their interest for the online version can do so via the Nottingham website.
The mutual becomes just the second provider to offer a cash version of the property-come-pension hybrid scheme, following the Skipton’s Lifetime ISA launch in June last year. It also comes at a time when MPs have called for the Lifetime ISA to be abolished.
Savers can open the Nottingham’s LISA with a minimum £10 and the interest rate offered is 1%. Savers will also receive a government bonus of up to £1,000 each year on balances of up to £4,000.
The Nottingham also confirmed that anyone taking out its LISA will have free access to its whole of the market mortgage advice service, which usually costs £249 for non-members.
Simon Taylor, chief operating officer, said; “We understand the many challenges facing first-time buyers saving a deposit in a competitive and crowded housing market. Saving into a LISA will either help first-time buyers save their deposit quicker, or put down a larger deposit.
“As part of our unique proposition, we are also the only society who will search the whole of the mortgage market to find our members the right mortgage for them, offering the potential for even greater savings.”
How good is the Nottingham’s Lifetime ISA offering?
Anna Bowes, co-founder of savings advice site Savings Champion, said it’s good to see some competition amid speculation the LISA is to be scrapped, but the offering is underwhelming.
She said: “Disappointingly it’s simply matching Skipton Building Society, offering an uninspiring 1% tax free/AER.
“Having said this, the interest earned is the cherry on the top as the 25% bonus is the real prize, dwarfing any interest that is applied.
“It would be a shame to see this valuable tool removed from the ISA stable – and we hope that Nottingham’s move will inspire other providers to follow suit.”
Andrew Hagger of independent data site MoneyComms, said the LISA remains a no brainer for many first-time buyers.
“The Nottingham’s offering should prove attractive, not just because of the generous government bonus, but because customers have the option to sit down and talk it through in branch plus get free whole of market mortgage advice as part of the deal.
“Online may be the channel of choice for simple products such as cash savings, loans and credit cards but when it comes to buying your first home, a bit of hand-holding and guidance is as welcome to first-time buyers as the 25% bonuses that come with the LISA product.”
Hagger added that Skipton Building Society has been extremely successful with its cash-based LISA. “Hopefully the Nottingham will follow suit and won’t be the last new player to enter this market,” he added.