Tembo has added a cashback bonus payment of up to £300 to its cash Lifetime ISA.

Customers transferring a Lifetime ISA of £5,000 or more to Tembo from another provider will receive the cashback. The offer is valid until 31 July.

The cashback bonus will be paid to the cash Lifetime ISA account six months after funds are received by Tembo.

The lender requires customers to hold their cash Lifetime ISA for a minimum of 12 months for the offer to be valid.

The lender has an underlying interest rate of 4.3% (AER variable), however, the cashback payment takes the AER variable to the equivalent of up to 5.07% depending on the value of the transfer.

With the Monetary Policy Committee (MPC) expected to reduce the base rate in the coming months, Tembo says customers are now well placed to benefit from the final days of higher rates before they start to fall.

The FCA has found that on average, UK savings only earn 1.25% interest.

Tembo says for many first-time buyers (FTBs) earning the highest amount of interest on their savings will be an important part of their route to home ownership.

The government’s Lifetime ISA allows 18-year-olds to save towards buying first homes that cost £450,000 or less.

Savers can put in up to £4,000 each year to the account up to a maximum of £20,000 in the 2024 to 2025 tax year.

The government will add a 25% bonus to these savings, up to a maximum of £1,000 per year.

However, withdrawals from the account that are not used to buy a home incur a 25% charge of the whole amount, effectively removing the government’s bonus.

Tembo chief executive Richard Dana comments: “Many FTBs will have been disappointed with the Bank of England’s decision last week to hold the base rate yet again. However, high interest rates are also a good opportunity for deposit savers, who should take this moment to review their savings rates and ensure they’re on the best possible deal.”

“Average UK savings only earn 1.25% interest, which – given the high inflationary environment – is a very poor consumer outcome. We’re delighted to offer a further incentive for first time buyers, by offering up to £300 cashback on top of our market-leading underlying rate of 4.3% AER (variable).”