Brokers are divided over a new mortgage scheme targeting buyers with small deposits and no access to family help.
Residential lender Gen H has launched New Build Boost, which allows buyers to take out an 80% loan-to-value ratio with a 5% deposit.
Gen H says it will close the gap with a 15% interest-free boost supported by the house builder.
“This looks to be a great initiative from Gen H, removing the interest payments issue many Help-to-Buy borrowers complained about after those initial five years,” Justin Moy, managing director at EHF Mortgages, told Newspage.
If property prices remain flat for the next few years, this could be a “great opportunity”, he said, but buyers need to remember the loan will cost more in the long run if prices rise.
Other brokers were less impressed. Ranald Mitchell, director at Charwin Mortgages, called the scheme “Help to Buy 2.0 – a repackaged trap”.
“A lower 15% equity loan doesn’t fix the real issue: getting out,” he said.
“Buyers will step into shiny new homes, only to find limited mortgage options down the line, leaving them stuck.
“Homeownership should be simple – if you can’t afford it, don’t buy it. Instead, we’re seeing complex schemes that lure people in but offer no easy exit.
“We’ve been here before with Help to Buy and have we learned nothing.”
