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OneFamily Lifetime ISA Review


If you are wanting to save some money towards a deposit to buy your first home, or, if you are looking to save more for retirement, then a Lifetime ISA might be just up your street.

Today we review the OneFamily Lifetime ISA. We explain the potential benefits of a Lifetime ISA as a pose to other types of ISA. Then we’ll look at what OneFamily have to offer specifically. Finally, we’ll give you details of how much money you’ll need to open a OneFamily Lifetime ISA.

What is a Lifetime ISA?

If you’re still new to the concept of a Lifetime ISA, then let me take a few moments to explain how it all works.

The Lifetime ISA has been designed by the government to give a boost to those people who are either looking to save towards a deposit to buy their first home, or those who want to save towards their retirement. The basic principle is that for every one pound a person invests into a Lifetime ISA, the government will top it up by 25%.

The maximum amount that you can put into a Lifetime ISA in any one tax year is £4000, meaning the maximum bonus you can earn from the government each year is £1000.

Who can apply?

Now you know what a Lifetime ISA is, you might be wondering if you are personally eligible to apply for the OneFamily Lifetime ISA?

Well, the first thing you need to know is that to be eligible for a Lifetime ISA, you need to be between 18 and 39 years old.

You’ll also be pleased to hear that you can apply for a Lifetime ISA even if you already have a Cash ISA and a Stocks and Shares ISA, as long as you haven’t already contributed all of your £20,000 ISA allowance this tax year to other ISAs.

You can also have more than one Lifetime ISA if you want, but you can only contribute to one in each tax year.

Who is the Lifetime ISA for?

The OneFamily Lifetime ISA is a Stocks and Shares ISA, so any money you subscribe will be invested into the stock market.

This could mean that it gives a better return than a Cash ISA in today’s low interest rate environment. It also means that as the value of shares can rise as well as fall, you could also get back less money than you put in. So, if you don’t mind taking a little risk in the hope of greater returns, then a Lifetime ISA could be for you.

You also need to think about what your investment goals are and how quickly you’ll need access to your money.

Those who are looking to buy a home

If you’re looking at a Lifetime ISA to save for a deposit on your first home, then it’s worth knowing that you need to have your money invested in the ISA for at least one year to be eligible for your first 25% top-up payment from the government. So, if you want to get a mortgage and buy a house in 3 or 6 months time, then this might not be the right option for you. You also need to be buying a house that is worth no more than £450,000.

The other thing you need to be aware of is that if you change your mind and decide not to buy a house and you want to withdraw your money after just a couple of years and before you’re 50, then the government will apply a 25% withdrawal charge to reclaim the top-ups they have paid.

That being said, you could just keep your money in the ISA towards your retirement years if you wanted to do that instead.

Those who are saving for retirement

Now we come to those who are considering the a Lifetime ISA to save towards retirement.

As we mentioned earlier, to be eligible for a Lifetime ISA you need to be between 18 and 39 years of age. Once you have a Lifetime ISA you can continue to pay into it until you are 50 years of age and each year you’ll be eligible for a maximum top-up bonus of £1000.

While you can technically withdraw your money from the Onefamily Lifetime ISA at any point, if you withdraw it before you are 60 years of age and it’s not because you are terminally ill or you are wanting to buy your first home, then the government will apply a 25% charge to the withdrawal to recoup the top-up bonuses they have already paid.

What is the Minimum Investment?

The maximum you can invest in the OneFamily Lifetime ISA each year is £4000, but what is the minimum investment? With OneFamily you can invest from £25 per month or with a one off lump sum of £250 if you would prefer that option. You can also add to your investment as and when you want to, up to the £4000 limit each year.

Why the OneFamily Lifetime ISA?

You will hopefully have a better idea by now about whether a Lifetime ISA is going to be suitable for you or not. So, now we’ll look more specifically at what OneFamily have to offer with their Lifetime ISA.

What OneFamily have done with their Lifetime ISA offering is to make things simple and transparent. Rather than baffling customers with an array of funds or other investments to choose from, they have offered customers a choice of two simple funds.

The first fund is aimed at those who have a shorter term investment of around 5 years in mind.

The second fund option is for those who are looking to invest for around 10 years.

This simplicity may suit you or it may not depending on how much choice you would like to have. It’s good to know, though, that the company will allow you to switch between these two funds free of charge if you find that your investment goals change over time.

To see how much money you could potentially get back from investing in either of these funds, take a few moments to have a play around with the Lifetime ISA Calculator on the OneFamily website.

OneFamily have applied the same simplicity to their fee structure by charging a flat annual management charge of 1% to the account. There is an investment expenses charge of around 0.3% applied on top of this figure, though.

It’s quick and easy to apply online and you can manage your account online going forward too.

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