Best Cash Lifetime ISA providers

Ready to save for your first home? A Cash LIfetime ISA is a great idea – you’ll get a massive 25% government bonus on everything you save (up to £4,000 per year), which can really supercharge your deposit.

You might already know the ins-and-outs of Lifetime ISAs already, so if you’re just here for the very best Cash Lifetime ISAs, here they are…

(we’ll cover everything you need to know about Lifetime ISAs after).

Best Cash Lifetime ISA providers

The best interest rates, easy to use, and great service.

Our criteria for the best Cash LISAs

It can be a bit of a minefield out there when looking for savings accounts, and Cash LISAs are no different. Lots of the big banks and financial companies can look like good options, but they don’t often have the best interest rates, meaning you could lose out on a lot of cash over the years.

We’ve looked at all the top Lifetime ISAs out there to narrow down on the best Cash Lifetime ISAs, so your hard earned savings can work hard for you in the best way possible. Here’s the criteria we looked at:

• Interest rate (how much you’ll make)
• Ease of use
• Customer service
• Customer reviews

So, whichever one of our top Cash LISA recommendations you opt for, you can be confident you’re using one of the very best out there (and making the most interest from your savings).

Nuts About Money tip: we’ve reviewed Cash LISAs, here’s where to go if you’re after a Stocks and Shares Lifetime ISA.

What is a Lifetime ISA?

A Lifetime ISA is a great way to save for your first home, and even retirement (but you might find a pension could be better for you – learn more with our guide: Lifetime ISA vs pension).

With a Lifetime ISA, you’ll get a massive 25% bonus from the government, added directly to your LISA account. It’s a huge boost to your savings, and all the money you make is completely tax-free.

You’ll be able to save £4,000 per year tax year, which runs from April 6th to April 5th the following year – which means you’ll get up to £1,000 for free every year if you’re able to save that much.

You can open a LISA between the age of 18 and 39, and keep saving into it until you’re 50. 

However, you can only save into one LISA per tax year, but you can transfer your LISA to another provider if you want to (e.g. to get a higher interest rate), if not, you can open a new LISA in the next tax year.

When you’re ready to buy your first home, you can use the LISA towards the purchase as long as the property value is under £450,000.

If there’s two of you buying the home, and you’re both first time buyers, and both have a LISA, you can use both (otherwise just the first time buyer can still use it).

If you don’t use it for your first home, for instance, if the home you’re buying is over £450,000 and therefore can’t use it, then unfortunately, if you want to get your savings back, you’ll have to pay a penalty of 25% of the total value…

That actually works out as more than the 25% Lifetime ISA bonus you got (it sounds odd but the maths works out). So, you’ll be losing a bit of your own savings too.

Or, you can leave your LISA where it is, and withdraw it penalty-free when you’re 60.

Oh, one last thing, your LISA has to be open for at least 12 months before you can use it to buy your home – so if you don’t have one yet, it’s a good idea to open one as soon as you can (such as right now!), so the clock starts ticking. All you need to do is add £1.

If you’re not sure where to get started, check out Tembo¹, it’s one of the best interest rates out there, is easy to use and has great customer service. They’ll also be able to help with the mortgage when the time comes.

Lifetime ISA eligibility

Right, were those Lifetime ISA rules a bit confusing? Let’s break it down a bit more. To open and later use a LISA, you’ll need to:

• Be a UK resident
• Be aged between 18 and 39
• Be a first time buyer (someone who hasn’t bought their own home before)
• Buy a home for less than £450,000
• Buy a home with a mortgage
• Live in your new home (e.g. you can’t buy to rent it out)
• Have your LISA open for least 12 months

Is a Cash LISA the best option?

A Cash Lifetime ISA is the most popular option when it comes to the two types of LISAs (a Cash LISA and a Stocks and Shares LISA), as they’re much simpler, you just add money and earn interest in return, just like a savings account – and for most people they’re happy with that.

A Stocks and Shares LISA can be more beneficial if you’re planning to save over a longer period of time (for instance 5 years or more), as if your money is invested sensibly, it’s likely to grow more on average (over time) than saving cash.

However, there are ups and downs (in the value of your savings) over time, which is why they’re often favoured for those saving for the long term, rather than, say, planning to buy a home next year.

If this sounds interesting, again check out Tembo¹, where the experts can handle the investing for you – and aim to invest and grow your money sensibly over time. Or, if you’re more experienced with investing, check out Hargreaves Lansdown¹, where you can choose from a huge range of investment options.

Transferring an existing LISA

If you’ve got a LISA already, but not happy with where it is – don’t fret. You can simply transfer it to a new LISA provider you do like.

It’s easy to do too. All you need to do is let your new LISA provider know you want to transfer an existing LISA, rather than open a new LISA account – this should be a clear option when you sign up for the LISA.

That's it, your new LISA provider will take care of everything, and all the paperwork behind the scenes – your money will simply turn up in your account after a few weeks (sometimes 6 weeks or more).

If you’re due any government bonuses (the 25%) your new LISA provider will sort this out with your old LISA provider too.

Can I have a Cash ISA too?

You can also have a Cash ISA alongside your Cash Lifetime ISA, and even a Stocks and Shares ISA – the 3 main types of ISAs (Individual Savings Accounts).

There’s an annual allowance of £20,000 per tax year (how much you can save) as a total across all of your ISAs, but with a LISA, you can only save £4,000, which counts towards the £20,000 limit.

Transferring from another ISA

You can also transfer cash from a Cash ISA, or a Stocks and Shares ISA, into a Lifetime ISA, but only up to £4,000 per tax year, otherwise you’ll go over the limit (providing you haven’t added any cash into your LISA yourself within the current tax year to use your allowance).

Just let your LISA provider know you want to transfer money in, and where from.

How do I use a Cash LISA to buy a home?

Once you’ve found the home of your dreams (well, the dream home within budget), using your LISA is actually pretty easy.

As part of the home buying process, you’ll have a conveyancer to handle all the legal side of things (that’s a lawyer but they only deal with property).

Well, all you need to do is let your conveyancer know about your LISA and that you’d like to use it. Your conveyancer will take care of everything, and sort all the paperwork with your LISA provider, and then use your LISA cash as part of the house purchase. Easy.

Are Cash LISAs safe?

Yep, it’s perfectly safe to save within a Cash LISA.

Money held in a Cash LISA is typically held with large banks or financial companies (even if the LISA provider isn’t a large bank, they’ll partner with one to hold your cash). 

Your money is held in your name, and can only be returned to you (if something should happen to the LISA provider, such as going out of business).

You’ll also be protected by the Financial Services Compensation Scheme (FSCS), which gives you protection up to £85,000, should anything happen to the LISA provider.

Let’s recap

There we have it for the best Cash LISA – there’s some really great providers with great interest rates…

Tembo¹ tops the list of our top 10 Lifetime ISA providers. It has one of the best interest rates, and it’s easy to use, with great customer service. Plus, they’ll help you with the mortgage when the time comes to buy your first home.

Moneybox¹ comes in second, again with a top interest rate, and a great lifetime ISA provider, but the rate reduces after 12 months.

Remember, you have to have your LISA open for at least 12 months before you can use it – so even if you’re not ready to start saving, it’s a good idea to open a LISA anyway (just add £1), so the clock starts ticking down.

All the best saving for your first home!