Threshold Mortgage Advice

Can income and deposit boosters help you to afford the home you want?

With the raise in cost-of-living making it more difficult to save, buying a home (or even putting money aside for a deposit) might seem like an impossible dream for some.

Taking this into account, you start to appreciate why the number of households renting in England and Wales has more than doubled since the 2001 census.

But while home ownership may seem more distant today than it did a few years ago, one lender is doing its best to help wannabe buyers get their first foot onto the ladder.

Who are Generation Home?

Generation Home (or Gen H) are a mortgage lender who say they want to make home ownership more affordable and less complicated.

Like most lenders Gen H offer a range of mortgage products aimed at both home movers and first-time buyers, as well as those looking to remortgage. They’re also authorised and regulated by the Financial Conduct Authority.

The key point of difference between taking out a mortgage with Generation Home versus other lenders, however, is that they offer two ways to increase how much you can borrow, thereby giving you more spending power when it comes to buying a property.

Why are Generation Home willing to loan more than other lenders?

Generation Home recognise that the way affordability is calculated by lenders is contributing to making it difficult for some buyers to get on the property ladder.

This is because lending criteria generally takes into account a person’s take-home pay after tax, the amount they have saved for a deposit, and their regular monthly outgoings.

The problem with this, however, is that house prices have increased much faster than salaries. This has resulted in some applicants being priced out of the market and effectively trapped in a cycle of renting.

Generation Home, however, have come up with two inventive ways for prospective home buyers to boost their borrowing potential: Income Boost and Deposit Boost.

What is Generation Home Income Boost?

A Generation Home Income Booster is a family member – Parents, grandparents, siblings, aunt, or uncle, who’s willing to go onto the mortgage with you so you can borrow a bigger pot of money. However, they’ll also be liable for the mortgage if you fail to keep up the repayments.

An income booster can remain on standby to pay towards the mortgage if you fall into arrears, but they can also make voluntary payments if they and you are happy. This would allow the income booster to build up their own equity share in the property.

If you ever reach a point where you no longer need your income booster, you can just ‘eject them’ and go it alone. At this point they can gift their equity share to you or wait and take it out as lump sum payment when you remortgage or sell.

What is Generation Home Deposit Boost?

Deposit boosters can be friends or family who want to contribute money towards your deposit or pay your deposit in full, either as an interest-free loan or an equity loan.

If they choose interest-free, they’ll get back the exact amount of money they paid in. If they opt for an equity loan, their investment will go up or down according to the value of your home. Alternatively, the Deposit Booster can gift you the money outright at a later date, meaning repayment is no longer required.

How you reimburse deposit boosters is up to you. You can either set up a monthly repayment scheme that allows you to chip away at the debt, or you can just repay them the amount back in full when you sell or remortgage your home.

Generation Home provide the deposit booster with a legal agreement free of charge and manage the loan repayment.
There is no maximum number of deposit boosters for a mortgage application. Deposit boosters do not need to be UK residents, however, funds from the deposit booster must come from a UK-based bank account and be in the UK for 3 months prior to funds being released.
Deposit boosters must take independent legal advice (ILA) at their own cost before signing the deposit booster agreement.

Anything else I should know?

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. This is structured like a Joint Borrower Sole Proprietor (JBSP) mortgage. This means that if your income booster is a homeowner already, you won’t get charged a higher rate of stamp duty when you complete on your purchase.

Applicants’ interests are protected through the home agreement, Generation Homes version of a deed of trust. It provides robust legal protection to each individual borrower throughout the term of their mortgage.
Income boosters must take independent legal advice (ILA) at their own cost before signing the home agreement.
Income boosters are not allowed to reside in the property.

See how much you could borrow with Generation Home

If you’ve struggled to secure a mortgage from a mainstream lender, or you’ve been offered an amount that’s too little to afford the home you need, book an appointment to chat with one of our Threshold mortgage brokers.

Our team can compare how much you may be able to borrow across a wide panel of banks and building societies, in addition to using deposit and income boosters with Generation Home.

Your home may be repossessed if you do not keep up repayments on your mortgage

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