8 min read

Helping to buy? Lifetime ISA pays out as much as rival product in bonuses in less than half the time on the market

Posted in: Products

  • Lifetime ISA bonus payments have already matched total Help to Buy ISA bonus payments at £130 million[i]
  • This is despite the Help to Buy ISA launching 2.5 years ago and the Lifetime ISA just 16 months ago
  • Lifetime ISA investors have received an average bonus of £764 each
  • As the bonus is paid monthly, investors see their pots grow quickly
  • Just one in five Help to Buy ISA customers have received a bonus as funds are paid when property is purchased and the ISA is closed
  • Maximum bonus through Lifetime ISA is £33,000, ten times higher than the Help to Buy ISA

For those saving for a first home or retirement, the Lifetime ISA is already delivering results. According to the latest published statistics from the Government, bonus payments on the Lifetime ISA have already matched the total paid out in bonuses by the Help to Buy ISA, despite it being launched nearly a year and a half later.

The Government bonus of up to £1,000 a year is paid monthly into the Lifetime ISA, meaning investors quickly see their pots grow, and this in turn encourages them to save more. Furthermore, because the government money is added to accounts every 30 days, and investment returns are earnt on the total amount, this results in an additional return to savers. 

Nici Audhlam-Gardiner, Managing Director of Lifetime ISAs at OneFamily commented:

“The Lifetime ISA has recently been subject to unhelpful speculation but these figures demonstrate the excellent benefits savers can access, which are unique to this product. We know from our customers that they are delighted with the growth they are seeing on their investments, as they can see the benefits in real time.

“The Help to Buy ISA, which remains on the market for the short term, has a major flaw in that the bonus isn’t paid until the ISA is closed. This means that not only do savers not benefit from regular top ups, but they can’t use the money for a deposit as it’s available only on completion of the sale of a property. Furthermore, the maximum bonus available is just a tenth of what savers can get on a Lifetime ISA. Unfortunately, many savers aren’t aware of this so end up with a product that isn’t ideal for their needs.

“We know it’s harder than ever for young people to save and the Lifetime ISA is a helping hand for the under 40s. We urge the Government to add further weight to promoting the Lifetime ISA and consider how it can be further enhanced. It is a huge help to the younger generation in achieving two of life’s biggest financial challenges of buying a first home and saving for a comfortable retirement.”

To find out more visit: www.onefamily.com/lifetime-isa/

[i] HMT report December 2015 – December 2017. Published April 2018, total value of bonuses paid from the Help to Buy ISA since launch is £132million. HMT statement issued 26 July stated over £130 million had been paid in bonuses on Lifetime ISA.