Generation H is allowing buyers to apply for bigger loans by adding family and friends to their home loan application in a move to help more Brits get onto the property ladder
A new mortgage deal has come on the market which could help get more people onto the property ladder.
Lender Generation H has widened income booster eligibility to accept nieces, nephews and friends as income boosters. Friends will be allowed to be an income booster for mortgages up to 80% loan-to-value. Extended family will be allowed to act as income boosters for mortgages up to 95% Loan to Value. Other eligible family members include parents and step-parents, children and stepchildren, grandparents, siblings, half-siblings and step-siblings and uncles and aunts.
Income boost is where you can have someone else coming onto the mortgage with you, but not owning the property. It is a way of increasing what you can afford to borrow for a mortgage as their income, including retirement income, is taken into account.
Gen H’s income booster also has a calculation to remove the booster at age 85, so age won’t limit the mortgage term. This means borrowers with older boosters can achieve a 30-40-year mortgage term. A survey of Gen H’s income booster cases found 62.4% of owners with income boosters are under 40, but 37.6% are over 40 and 16.4% are over 50.
Will Rice, Gen H’s CEO, said: “We’ve seen how many people our income booster product has been able to help. This is why, when our brokers began requesting that friends be able to act as income boosters, we took note. I’m delighted to introduce this change, especially in light of two consecutive rate reductions, because it means we’ll be able to support even more aspiring homeowners. This important development is thanks to the attention and advocacy of our broker partners.”
Justin Moy, Managing Director at EHF Mortgages, told Newspage: “Any innovation is superb for the mortgage market, and this extension of Gen H’s policy will allow more buyers to afford their first or subsequent properties by going down the joint borrower and sole ownership route.”
However, he warned: “Those helping a borrower need to beware of the impact on their own finances. After all, the mortgage will become a commitment on their own mortgage applications and will limit their own financial capacity. With older family it may not be so much of a problem, but if friends are of a similar age, this could create an uncomfortable issue when they wish to move or refinance.”
