Yorkshire Post - Property
Lending a boost to first-time buyers
A new mortgage lender is all set to make borrowing with the help of family and friends much easier. Sharon Dale reports.
Data from Rightmove shows that average first-time buyer asking prices in the UK have hit a new record of £214,176, after a monthly jump of 1.4 per cent.
The rising values coupled with the Government’s Help to Buy equity loan scheme for newbuild properties coming to an end in March 2023, are a blow to those who dream of owning their own home. However, the crisis has opened the door to entrepreneurial ideas.
A new mortgage lender, Generation Home, aims to help first-timers get onto the property ladder and also has impressive plans to support other would-be borrowers.
The business was established by husband and wife team Will Rice and Sophia Guy-White after they faced disappointment when trying to buy their first home.
The couple turned a negative into a positive by investing the money they saved as a mortgage deposit into creating the truly innovative new lender, Generation Home.
The aim, says Will, was: “Building a lender capable of making a real difference to firsttime buyers.”
The couple have achieved their aim and their Income Booster and Deposit Booster mortgages are set to provide a better way for the families and friends of first-time buyers to lend a hand while, crucially, protecting and enhancing their investment.
The income booster mortgage allows another party, most often mum and dad, to be on the mortgage, which enables firsttime buyers to borrow more money.
The “booster” will be liable for the mortgage, along with the buyers and is able to contribute to mortgage payments if they want to, in which case they will build up an equity stake in the property.
However, crucially, boosters will not be on the property deeds, they won’t be guarantors and they aren’t expected to remain on the mortgage for its full term.
“It’s about helping would-be homeowners to get started. The problem we are trying to solve is affordability as the biggest problem for first-time buyers is getting a deposit together.
“Our income booster lifts borrowing capacity by 66 per cent,” says Will.
If the family members are helping to pay the mortgage, they can opt to service the loan for a shorter period than the average 30-year term.
In that case, Generation Home works out when the homeowner will be able to service a loan by themselves and family members can then opt to cash in their equity stake in the property at the end of this term or they can gift it to the homeowners.
The Deposit Booster mortgage allows an investor, which can be friends, family, or whoever can help, to provide a first-time buyer with an interest-free loan or they can help fund a deposit on a home in return for a stake in the property.
If they decide to take a stake, it means that if the property increases in value, their investment also rises.
Otherwise, the homeowner and investor agree on a repayment plan, which could mean regular payments or payment upon remortgaging or selling the property.
Those who opt to become a Deposit Booster are not on the property deeds and nor are they required to be UK residents. They can also, if they wish, turn their investment into a gift.
“The Help to Buy scheme has shown that first-time buyers are an underserved segment of the mortgage market,” says Will Rice. “With the scheme coming to an end, it is important to provide additional support and alternative solutions. There is a huge untapped market of people with non-traditional funding arrangements, and we are proud to be serving that demographic with a unique solution.”
Mortgage Advice Bureau offices have been trialling the new products with great success.
Andrew Milnes, business principal of the Mortgage Advice Bureau in Bingley, says: “I think it’s very exciting and anything that makes that first step onto the property ladder easier and more achievable has to be admired.
“The Mortgage Advice Bureau is at the forefront of bringing these various initiatives to market, and our partnership with Generation Home perfectly complements our proactive strategy to engage with new and innovative solutions to support first-time buyers.”
Generation Home offer 90 per cent mortgages for second–hand homes and 85 per cent loans for new-builds but 95 per cent loans are on the cards. Next year, they are planning to launch a shared ownership mortgage and mortgages for the self-employed.
They also aim to have a Generation Home conveyancing team in place this year so they can get faster results for their customers.
Remaining plots at Harrogate development Woodfield
Square by Brierley Homes are available to buy with Generation Home mortgages for those who qualify. Prices are from £250,000 to £395,000. Visit www. linleyandsimpson.co.uk.
Anything that makes that first step onto the property ladder easier and more achievable has to be admired.