With property prices having risen significantly over the last couple of years, homeownership may feel out of reach for many, but there is another way to get on the property ladder.
Launched in 2020, Generation Home is a modern mortgage lender on a mission to make homeownership more accessible. They’ve built new ways to help First-Time Buyers onto the property ladder – from boosting affordability with an income booster, to smarter ways to get help securing sufficient deposits with deposit boosters.
If you’re a first-time buyer struggling to get onto the property ladder, their range of products could really help. Family support is often a crucial part of getting your deposit together, but high street lenders don’t offer any alternatives to gifting. Generation Home gives you options.
Income boosters make it easy to take out the loan you need to purchase a home. This is accomplished by adding someone else to your mortgage, even if they do not plan on living in the property.
An income booster helps you borrow more by adding their income to the mortgage.
Everyone on the mortgage is equally responsible for it, but how the repayments are divided is up to you.
An income booster can be removed from the mortgage once you can afford the loan on your income alone.
To preserve a first-time buyer’s stamp duty status, an income booster is not on the property deeds, but they are on the mortgage.
Boosters can be on standby to help as long as the other borrowers make monthly payments in full.
Boosters may choose to contribute regularly; if they do, they can build up a stake in the property.
Please note that income boosters must complete Direct Debit details during the application process, whether they are contributing or not. You can read more about why here.
Family members can act as your income booster: parents (including step-parents), children (including step-children), grandparents, siblings (including half-siblings and step-siblings), aunts, and uncles.
A deposit booster helps home buyers with the deposit. But instead of simply gifting the money, they contribute to the deposit via a loan.
Gift vs Loan
This is a personal decision for everyone, but there are some key advantages to a loan over gifting. Here are a few:
- You may want or need the money back in the future.
- You keep your options open as you can always gift part or all of your stake later.
- You may not like the idea of giving a handout but are willing to provide a necessary leg-up to get them started.
- You may be wary of break-ups, which would mean your money could go out the door.
- You may be able to help multiple children onto the property ladder with the same pot of money.
The loan can be either a deposit loan, which means they’ll be repaid the loan amount, or an equity loan, the balance of which increases or decreases depending on changes in the house price, so you have the economic exposure of a homeowner.
With an equity loan, if the home increases in value, the value of your financial stake would increase too. If the home decreases in value, so does your stake. Loans can be converted into a gift at any time.
A booster’s capital is ring-fenced to preserve a first-time buyer’s stamp duty status.
An owner can repay the loan in part or in full at any time via the Generation Home platform.
At remortgage or at sale
A deposit booster can request to be repaid at specified events such as the sale of the property or when remortgaging occurs and equity can be released.
As a deposit booster, you can choose how you want to treat your deposit contribution. If you want, you can gift the full amount, have the full amount marked as a deposit or equity loan, or split this up however you prefer.
If your goal for 2023 is to get onto the property ladder, then book an appointment to speak with one of our in-branch Mortgage Advisers today and find out how Generation Home can help you to own your own home.