The Unity Mutual Stocks & Shares Lifetime ISA Made Simple | What is a Lifetime ISA?
One of our most frequently asked questions is “how does a Stocks and Shares ISA work?” – This could possibly be due to our particular Stocks and Shares Lifetime ISA* functioning differently in comparison to many other providers’. Looking around online for the answers can be a nightmare, the information is flooded with financial jargon that expects you to understand all the details, when you’re completely new to the game. Let’s talk about it simply, in terms of what you’re getting yourself into when you open a Stocks and Shares Lifetime ISA, and what makes ours a little different.
What is a Lifetime ISA?
A Lifetime ISA is an investment in your future. They’re available to anyone aged 18-39 living in the UK, it can only be used to either buy your first home, or you can save for your retirement. Or, both! Once you’ve bought your first home, you can continue to save in your Lifetime ISA until the day you turn 50.
If you’re using your Lifetime ISA for a deposit on your first home, you must be a first time buyer, and you can use it on any home with a value of up to £450,000.
The biggest selling point of the Lifetime ISA is, of course, the 25% government bonus. This means that for every £4 you put in, the government puts in £1. So, if you take advantage of the £4,000 annual investment limit, the government will give you an extra £1,000 towards your savings each year. This could fast track you to getting a deposit down on your first home.
What’s more, if your partner is a first time buyer too, you can both use your Lifetime ISAs to save for your first home, and potentially get to your goal twice as fast. You can withdraw your funds to pay your deposit any time after the first 12 months.
What are the risks?
With the Unity Mutual Stocks and Shares Lifetime ISA, we assume all the risks, so your investment is 100% capital protected, and backed up by the Financial Services Compensation Scheme. The numbers in your account will only grow – as you add funds, and the government bonus and interests are added.
With other providers, however, you may be at risk of your funds going up and down, as the value of your investment increases and decreases within the stock market. Some stocks and shares accounts are managed by your provider, and with some, the choice is in your hands as to where you invest your funds. This could create more risk of loss on your funds, if you’re not confident with navigating the stock market.
With any LISA account, if you are to withdraw your funds early, and you’re not using them for your first home or retirement – you are at risk of facing early withdrawal penalties, along with losing your government bonus and interest. It’s important that you withdraw your money for your deposit via your solicitor or mortgage provider, or your withdrawal may be viewed as an early withdrawal.
What Makes a Stocks and Shares ISA different to a Cash ISA?
A Cash ISA functions more like a savings or bank account. Your money is your money, and the only time the numbers change is if you top it up, your bonus or interest is applied, or you choose to withdraw.
A Stocks and Shares ISA places your funds into the stock market, where your money has potential to grow, but is also at risk of declining.
With a Unity Mutual Lifetime ISA, we assume all of the risk that comes with investing in the stock market, so your money is exactly that – yours.
Why is the Unity Mutual Stocks and Shares Lifetime ISA Different?
Many Stocks and Shares ISAs don’t come with a set interest rate, because your money is subject to fluctuation in the stock market. Some also come with management fees, usually if you’re choosing to have your provider manage your stocks and shares investments.
With the Unity Mutual Lifetime ISA, however, your money is 100% protected, and your funds will only change if your bonus/interest is applied or you choose to top up or withdraw. Because of this, we are able to offer the market leading interest rate of any Cash or Stocks and Shares Lifetime ISA available to the general public**. We also don’t charge a management fee, which means your money, your bonuses and your interest is all yours and fully protected.
What’s the best thing about the Lifetime ISA?
The best thing about a Lifetime ISA is that it offers an incredible boost on your funds, to get you to your goals of being on the property ladder even faster. You can put money in it from being 18 years old, save for a deposit on your first home, and then continue to put money in it until you turn 50, and take advantage of the government bonus and interest until then.
Not only that, but if you were to pass away while you’re saving in your Lifetime ISA, 101% of your funds – including all bonuses and interest will be paid out to your estate.
If you’d like to compare Lifetime ISA providers, click here.
*Terms and Conditions Apply
**We are currently offering the market-leading interest rate available to the general public
**Figures based on independently verified research conducted by Mustard Research – April 2022, into the best available rates advertised on provider websites
The Unity Mutual Lifetime ISA is not restricted by any type of affinity or profession, and savers do not have to be existing customers to take advantage of this rate.
Unity Mutual cannot give you advice, we can only provide factual information.
