The product is open to borrowers with a minimum 5% deposit and Gen H will give them a mortgage at 80% loan to value (LTV). The 15% gap will be filled by an interest-free loan supported by the housebuilder.
This will give borrowers access to Gen H’s standard lending criteria for mortgages at 80% LTV.
The product has been modelled on the Help to Buy scheme, as it is an equity loan with a value that changes with the house price.
The boost portion of the loan is interest-free for the entire term and can run for the full duration of the mortgage. Gen H said this would avoid the “payment shock” faced by Help to Buy borrowers when redeeming their loans after the five-year interest-free period.
Gen H will allow borrowers to repay the boost portion of the loan in whole or in part at face value for the first five years. After that, the value of the boost will fluctuate according to the property’s value. The amount that is to be repaid under the boost will be capped at two times the original amount, to protect borrowers from significant rises in house prices.
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While the Help to Buy was a second charge mortgage that required separate collaboration with the mortgage lender and administrators of the scheme, the New Build Boost takes care of the loan through one application, one online account to manage home finances and the ability to make boost repayments at any time based on digital property valuations.
The New Build Boost has been exclusively launched with Persimmon Homes and will be available on any plot across the 120 participating sites in England.
Gen H will open the scheme to all housebuilders and invite other lenders to sign up and make their mortgages available through the scheme.
‘Rallying cry to the private sector’
Will Rice, founder and chief executive at Gen H, said: “The housing crisis that our country faces can only be solved by building more new homes and ensuring that suitable financing solutions are available for people to buy them. We have designed New Build Boost to open up homeownership to a wider audience – especially those who are not fortunate enough to have access to family support – while also giving homebuilders the confidence to ramp up the delivery of new homes to market.
“We applaud the ambition and urgency shown by the government to tackle the housing market’s structural problems. New Build Boost is our rallying cry to the private sector to raise its game and show that it too can be a part of the solution.”
Sonia Da Costa, chief customer experience officer at Persimmon Homes, said: “Given the ongoing challenge of affordability for many young families in particular, we are always looking for ways we can help make the dream of homeownership more accessible. We are delighted, therefore, to partner with Gen H to offer this opportunity to potential buyers, supporting them on their journey to new homeownership.”
Oliver Peace, founder and managing director of James Leighton Financial Services, said: “Gen H’s New Build Boost is a standout example of mortgage market innovation. Many potential buyers face two major barriers: insufficient borrowing power and a lack of deposit. Since the closure of Help to Buy Shared Equity in October 2022, no other product has addressed both challenges at the same time – until now.
“By enhancing affordability, this product will help many buyers who previously struggled to secure the home they need. While lending remains subject to Gen H’s policies, credit status, and overall suitability, this could provide a valuable new route to homeownership for first-time buyers and homemovers alike.”
