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Unity Mutual's Lifetime ISA retains top spot with 1.5% interest rate*

Published 6th April 2019 - Unity Mutual stocks and shares LISA as secure is as a cash LISA and offers market-beating, guaranteed 1.5% return • Offered by one of the country’s oldest friendly societies, with free life insurance option (T&Cs apply) • Switching matured Junior ISA money to LISA – can be a great way to boost savings

Unity Mutual, the financial services brand of the Oddfellows Friendly Society, has announced it is to increase the interest rate on its Lifetime ISA (LISA) to 1.5% from April 6th, enabling it to retain the top spot in the generally available guaranteed return LISA market.

The Lifetime ISA (LISA) is intended to help savers pay for their first home under £450,000 and is available to UK residents aged between 18 and 39. Savers receive an extra £1 from the government for every £4 they pay into the product (up to £4,000 p.a.) and can withdraw the money free of income and capital gains tax when they come to buy.

The Unity Mutual LISA is a stocks and shares LISA (banking regulations do not allow friendly societies to run cash LISAs). However, unlike most stocks and shares LISAs it protects savers’ capital and their government bonus by investing in a portfolio of its own residential properties, and offers a return that is guaranteed until April 2020.

Steve Code, Insurance Director at Unity Mutual said: “A traditional stocks and shares ISA puts all the investment risk on the shoulders of the saver. We’re taking that risk ourselves by protecting the capital. It means this product is comparable with cash LISAs. We already offered the best return in this space and we’ve now improved that. We’re also guaranteeing our interest rate for a year, whereas most cash LISA providers are able to change the interest rate they offer at just a month’s notice. We’re determined to be consistently competitive.”

Unity Mutual Director of Distribution Julie Hansen said: “The LISA is a valuable vehicle for enabling younger savers to save for a deposit to get on the property ladder. If they’re looking to make a purchase within five years most savers will want the assurance of capital protection. As a not-for-profit mutual we are committed to doing everything we can to pay market-leading rates consistently. This increase of 0.25% demonstrates that and keeps us at the forefront in terms of returns offered.”

In addition to the market-beating interest rate, the Unity Mutual Lifetime ISA also offers free life cover of up to £5,000 for regular savers looking to contribute a minimum of £1,000 per year over the next five tax years. The cover applies after just six months of saving.

An initial investment of £250 or a direct debit of £25 a month is required to open the online account.

Those saving for a house through an existing ISA are unable to receive the government contribution. Therefore, some of their ISA savings can be transferred into a LISA and they can then enjoy the government uplift.

Julie Hansen said: “Millions of parents save every year into a Junior ISA for their children often with the hope that it will be used for a house deposit in time. When the child turns 18 their Junior ISA automatically becomes an adult ISA and is theirs to do with as they wish. As long as you don’t go over your annual £4,000 LISA limit, it is possible to switch some of this ISA money into a LISA each year and get the extra 25% from the government on it. This is a great way of ensuring you maximise your contribution to a LISA and gives a nice 25% boost to the money parents and grandparents saved to help you set up home.”

* Sources - Lifetime ISAs How they work, who they're for & all best buys 12 March 2019 https://www.moneysavingexpert.com/savings/lifetime-isas/

Though most savers use Lifetime ISAs to save for their first home, some use them to save for a supplementary retirement income as you can withdraw the cash at 60. While it is possible to take savings out earlier, there is a 25% government penalty if you do.

For more information on Unity Mutual’s Lifetime ISA, visit: www.unitymutual.co.uk or call: 0161 214 4650.

  • Unity Mutual offers simple savings, investments and protection products to help families plan for the future. It is a not-for-profit, mutual organisation, which is owned by our policyholders. We do not have any shareholders.
  • Unity Mutual is part of the Oddfellows (www.oddfellows.co.uk) which is one of the largest and oldest friendly societies in the UK with assets of over £500m and 314,000 members.
  • The Unity Mutual LISA comes with FSCS compensation cover of up to £50k.

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