Best Lifetime ISA providers in the UK

What is a Lifetime ISA?

A Lifetime ISA is a special type of ISA savings account available to those aged 18-39 that lets you save up to £4,000 each tax year towards your first home or retirement. Each tax year you save into the account the government will boost your contributions by 25% for free, up to £1,000. You can choose a Cash Lifetime ISA, where your savings will benefit from interest growth, or a Stocks and Shares Lifetime ISA, where your funds will be invested in the stock market.

How does a Lifetime ISA work?

For every £4 you save into a Lifetime ISA, you get a free £1 off the government, up to £1,000 each tax year! The bonus is paid every year you pay into your Lifetime ISA, and is paid monthly (although it can take 4-6 weeks to land in your account). The money in your LISA must be used for your deposit for your first home purchase, or to fund your retirement - any withdrawals for other purposes will incur a 25% withdrawal charge, which means you could get back less than you put in. If you use your LISA for a home purchase, the property you're buying must be worth £450,000 or less, and be your first home anywhere (including if you've bought or part-owned a property abroad).

Who has the best Lifetime ISA?

When it comes to who has the best Lifetime ISA, it's a good idea to think long-term. Excluding introductory teaser rates, Tembo offers the market-leading Cash Lifetime ISA rate at 4.75% AER (variable) with no drop-off after year one. Saving up for your first home or retirement often takes years, and although introductory teaser rates might seem appealing, you might forget to switch down the road. This isn't uncommon, we're creatures of habit - over a third of us have had the same current account for over 20 years.

In fact, the FCA - the financial watchdog - has previously called such teaser rates the "financial equivalent of the Venus fly-trap" for taking advantage of our customer loyalty, as it often leaves us with a worse deal in the long run. This is why at Tembo, we don't believe in introductory rates and offer our market-leading 4.75% AER (variable) rate for every year you're saving 👏
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Who offers Lifetime ISAs?

There are a range of banks and savings providers that offer Lifetime ISAs including Tembo, but not all banks and building societies offer it as a product. Instead of looking to see if your local high street bank offers a Lifetime ISA, look at who offers the best Lifetime ISA rate instead. This may be a digital bank or a newer savings provider as opposed to an older bank. Saving with a high interest rate can help your Lifetime ISA savings grow by hundreds compared to saving with another provider.

The below list is based on UK Lifetime ISA accounts providing the highest rate of interest or best service for first-time buyers or retirement savers.

Best Cash Lifetime ISA providers:

Here are the top Cash Lifetime ISA providers in the UK to choose from:

1. Tembo

The Tembo Cash Lifetime ISA offers the market-leading rate at 4.75% AER (variable). Over 5-years, that means over £775 more added to your savings pot if you save with us vs the best next rate on the market.

As well as our market-leading rate, our intuitive app will also show you your time to save, not to mention tips and guidance to reduce that timeframe. Tembo savers can also access our award-winning mortgage service fee-free, helping you to discover ways you could buy sooner or increase your budget - on average, our customers boost their mortgage affordability by £82,000!

What’s the interest rate? 4.75% (AER variable)

How do you open an account? App

How do you manage your account? App

When is the interest paid? Monthly

Can you transfer from other ISAs? Only from existing LISAs, not ISAs

2. Beehive Money

Beehive Money is part of The Nottingham, a building society founded all the way back in 1849. Beehive’s goal is to help you turn your homeownership dreams into a reality with easy-to-use tools and a network of carefully chosen partners. Its Homebuyer LISA could be for you if you’re looking for a way to boost your house deposit and manage your savings via a handy app.

What’s the interest rate? 3.30% tax-free p.a/AER.

How do you open an account? App

How do you manage your account? App

When is the interest paid? Annually

Can you transfer from other ISAs? Only from existing LISAs, not ISAs

3. Skipton Building Society

Skipton Building Society has been around since 1853, providing everything from savings accounts and ISAs to standard mortgages and insurance. You can easily open and manage an account with them online. However, if you want the option to pop into a branch to speak to someone in person, Skipton may be the best Lifetime ISA provider for you, since it has 88 of them across the UK. There’s also the option to talk via video link if you don’t have any branches close by.

What’s the interest rate? 2.80% tax-free pa/AER variable

How do you open an account? Online

How do you manage your account? Online

When is the interest paid?  Annually

Can you transfer from other ISAs? Yes

4. Paragon

Paragon is a specialist lender and savings bank that’s serviced more than £1.5million customer accounts. It was founded in 1985 and is part of the FTSE 250. 

Paragon’s Lifetime ISA has been available since 2019. Once you’ve opened your account, you can manage it online, by post or over the phone. You can also transfer from other LISAs and there are no additional account fees.

What’s the interest rate? 3.51% gross/AER variable rate

How do you open an account? Online

How do you manage your account? Online, by post or phone.

When is the interest paid? Annually

Can you transfer from other ISAs? Yes but only other LISAs

5. Newcastle Building Society

Newcastle Building Society provides savings accounts, mortgages and home insurance to millions of customers. It has 31 branches across the North East, but you don’t have to live in that region to use its products or services. You can open and manage your account online while also benefiting from fantastic customer service if you’re ever in need of help.

What’s the interest rate? 2.85% AER variable rate

How do you open an account? Online

How do you manage your account? Online

When is the interest paid? Annually

Can you transfer from other ISAs? Yes but only from existing LISAs

Interest rates accurate as of November 2024.

Best Stocks & Shares Lifetime ISA providers

If you’re using the Lifetime ISA for retirement, or are not planning to buy a home soon, a Stocks and Shares LISA may be more suitable than a Cash LISA. Not only will the government top up your contributions by 25%, you’ll also benefit from investment growth ⁠— which historically has outperformed savings interest in the long term. However, the value of your investments can go down as well as up and you may get back less than you originally invested.

Here are some of the top Stocks and Shares Lifetime ISA providers in the UK at the moment:

1. Tembo

Unlike other Stocks and Shares Lifetime ISA providers, Tembo doesn’t charge a monthly fee. Instead, you’ll pay a 0.35% platform fee and a 0.17% fund provider fee. Your money would also be invested in the Blackrock MyMap 5 Select ESG fund, which is an ESG fund - ESG stands for environmental, social and governance, meaning it's a collection of "ethical" investments designed to have a positive impact. While you might think the ESG funds might not perform as well as other funds, this isn't necessarily the case - the Blackrock MyMap 5 Select ESG fund delivered a total return of 12.3% in 2023!

Cost: 0.35%

Average annual fund cost: 0.17%. Additional fees charged by the fund provider BlackRock.

How to manage: App

Minimum investment: £25, but we recommend to save as much as you can. While low balances will still benefit from interest with a Cash LISA, Stocks and Shares LISAs are subject to an annual management fee which is applied monthly.

2. Nutmeg

Nutmeg is an online investment management service with a range of investment products including LISAs, ISAs, pensions, and general investment accounts. Nutmeg is the largest digital wealth manager in the UK with 200,000 clients. It believes investing should be a “clear and straightforward” experience, with its website promising transparency and easy access to performance metrics. 

It offers a fully managed service where your portfolio will be managed for you, but this comes with an annual charge of 0.75%. Alternatively, you may choose a fixed allocation portfolio with a smaller fee of 0.45%.

Cost: 0.75% up to £100k per year, 0.35% on portion above this

Average annual fund cost: 0.17% to 0.32%

How to manage: Online/app

Minimum investment: £100

3. AJ Bell

AJ Bell is one of the UK’s largest investment platforms, with over 540,000 customers. Its Lifetime ISA may be ideal if you’d like a wide choice of investment funds. But with a high initial investment of either a £500 lump sum or £25 a month, it might not be suitable if you only want to invest small amounts.

Cost: 0.25% custody charge (maximum £3.50 a month for shares)

Fees to buy/sell funds: £1.50

Fees to buy/sell shares: £9.95 (or £4.95 if you made 10 or more share deals in the previous month)

How to manage: Online/app

Minimum investment: £500 lump sum/£25 a month

4. OneFamily

When you choose a Lifetime ISA with OneFamily, your money will be invested in climate-friendly investment funds. “Climate-friendly” can mean different things to different organisations, so here’s what it means to OneFamily:

• Higher revenue percentage from “green” business activities such as renewable energy production
• Lower greenhouse gas emissions
• A clear strategy and action plan to reduce greenhouse gas emissions
• Lower proportion of income from non-climate friendly activities such as drilling and mining
• Lower carbon emissions, including within their supply chain.

Cost: 1.10% annual management charge. 0.30% investment expenses charge

Fees to buy/sell funds: None

Fees to buy/sell shares: None

How to manage: Online

Minimum investment: £25 per month/£250 lump sum

5. Hargreaves Lansdown

Hargreaves Lansdown is a FTSE 100 company, managing more than £120 billion for 1.7 million clients. When you open a Hargreaves Lansdown LISA, you can choose your own investments or pick one from its ready-made portfolios. You can add money to your LISA with a monthly Direct Debit, making it easier to grow your savings without having to think about it. If you don’t know what to invest in, you can add cash to your LISA now, then decide where to invest later on. 

Cost: This depends on whether you hold funds or shares. For shares, there’s a 0.25% annual management charge (capped at £45 a year). For funds, 0.45% on the first £250,000, 0.25% for the value between £250,000-£1m, 0.1% on the value between £1m-£2m and no charge on anything over £2m.

Fees to buy/sell funds: None 

Fees to buy/sell shares: Between £5.95 and £11.95

How to manage: Online/app

Minimum investment: £100 to open the account. £25 minimum for monthly payments.

Perfect for you: Should I buy a house?

So, where is the best place to get a Lifetime ISA?

When it comes to saving into a Cash Lifetime ISA, Tembo is the best bet - over 5 years our market-leading 4.75% AER (variable) interest rate will increase your LISA savings by over £775 in interest alone vs the closest rate on the market. When it comes to a Stocks and Shares Lifetime ISA, this really depends on how much flexibility you want in choosing where your money is invested. Providers like AJ Bell and Hargreaves Landsdown are older names with a wide choice of investment funds, but they have higher required amounts to open accounts with them. If you want to choose a provider that chooses the fund for you knowing you are investing ethically and have a lower minimum opening balance, our Stocks and Shares LISA could be a good option.

Is it too late to open a Lifetime ISA?

If you're aged between 18-39, it's not too late to open a Lifetime ISA and use it to save up for your first home, or retirement. Remember that you must have the account open for 12 months before you use it to purchase your first home. If you want to use a LISA to save for retirement, make sure to open the account before the cut-off age. You can keep paying into your LISA until your 50th birthday, and your funds will continue to earn interest or investment growth until you take your savings out once you're 60 or over.

What are the disadvantages of a Lifetime ISA?

One of the main disadvantages of a Lifetime ISA is the age restrictions - you must be aged between 18 and 39 to open a LISA. You must have the account open for at least 12 months before using it to purchase your first home, and if you're saving for retirement you can't access your funds until you're at least 60. The other main disadvantage of a Lifetime ISA is the withdrawal penalty - if you withdraw your money from your LISA for any reason apart from buying your first home or funding retirement, you'll incur a 25% withdrawal charge, which could mean you'll get back than you put in. If you're using a LISA to purchase a property, the property you're buying must be worth £450,000 or less, be in the UK and you must use a residential mortgage to purchase it.

Struggling to save up enough?

With costs of living going up and earnings remaining fairly flat, it’s unsurprising that one of the most common reasons we see for people being unable to get a mortgage is due to being unable to put money aside to save up a large enough deposit. Thankfully, we’re here to help. At Tembo, we work with over 100 lenders and specialist buying schemes to help the next generation get on the property ladder. These include guarantor mortgage options including a gifted Deposit Boost and family springboard mortgages. 

And don’t worry if your family isn't in a position to help you. There are other options including joint mortgages with friends or siblings, shared ownership and 5.5x Mortgages.

So whether you’re ready to buy or you’re wondering what your options could be, create a free plan with us today. On our homebuyer platform, our bespoke technology analyses your eligibility for specialist schemes from over 100 mortgage lenders to create a personalised recommendation just for you.

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