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Parents should consider HouSAs for Junior ISAs, says Castle Trust


Parents saving for their children in cash Junior ISAs may be missing out on the chance to help their children buy their first home if IFAs are right about future prospects for house prices, analysis by housing investment and shared equity mortgage provider Castle Trust shows.

Rates on cash Junior ISAs from 31 banks and building societies – where parents can save up to GBP3,600 a year for under-18s – range from as little as 1.4 per cent to six per cent, the analysis shows.
Castle Trust, which offers Income and Growth HouSAs that qualify for inclusion in Junior ISAs, believes that parents should look at investments such as housing, particularly if they are saving to help their children buy a home in the future.
Castle Trust’s research with over 300 IFAs showed that nearly three in five (56 per cent) expect UK house prices (the Halifax House Price Index) to rise in the next three years while over two thirds (68 per cent) expect prices to rise over the next five years and more than four in five (83 per cent) expect prices to climb over 10 years.
Sean Oldfield, chief executive officer, Castle Trust, says: “Cash Junior ISAs are a good way to get in the habit of saving for your children but average rates of return can be lower than investing long term in the UK housing market.  If you want to help your children save for the deposit on their first home, the only way to ensure you keep pace with house prices is to invest in house prices.”
Castle Trust’s two investment products, Income and Growth HouSAs, provide returns linked to, and in excess of, the Halifax House Price Index and can be taken out for terms of three, five or ten years.
The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between two per cent and three per cent, depending on the term of the investment.
The Castle Trust Growth HouSA offers a gain of between 1.25 times and 1.7 times any increase on the Halifax House Price Index, or a loss of between 0.75 times and 0.3 times any decline.
Minimum investment is from just GBP1,000 and there are no annual management charges.  An initial fee of up to three per cent of the investment is payable, depending on the terms clients agree with their financial adviser.

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