Is Help To Buy 'successor' a game changer for first-time buyers?

When it comes to releasing a new mortgage product, little will garner as much interest as a solution aimed at helping first-time buyers. Addressing the affordability of those struggling to get on to the property ladder is the Holy Grail of the mortgage industry.

Now stepping into the fray is fintech lender Gen H, which has unveiled New Build Boost – a partnership with housebuilder Persimmon and boldly described as a private sector alternative to the government’s former Help to Buy scheme.

What’s more, its new offering will be available to both first-time buyers and homemovers across more than 120 Persimmon sites. The purchaser will put down a 5% deposit, alongside an 80% LTV mortgage with the lender, and Gen H will close the gap with a 15% interest-free ‘boost’, supported by Persimmon. The boost mirrors Help to Buy in that it is an equity loan, the value of which increases or decreases with changes in the house price.

It is interest-free, up to the full duration of the mortgage. This, Gen H suggests, avoids the payment shock that Help to Buy customers encountered if they were unable to redeem their equity loan after the first five years. The borrower has the right to repay the boost at face value during this time period. Where Help to Buy was a second charge mortgage that required separate coordination with the mortgage lender and the administrators of the scheme, New Build Boost brings the whole customer experience together ‘under one roof’.

On paper, so far so good, but do mortgage brokers consider this to be a game changer?

Nicholas Mendes (pictured left), mortgage technical manager and head of marketing at London broker John Charcol, believes it is a ‘thoughtful and well-structured alternative’ to Help to Buy, providing FTBs with a genuine affordability solution.

“Gen H’s New Build Boost mortgage presents a compelling option for first-time buyers struggling with high deposit requirements,” said Mendes. “It lowers the upfront financial burden, making homeownership more accessible. For those who meet the eligibility criteria and are comfortable buying a new-build property, this could be a worthwhile option, especially given that the equity loan remains interest-free for the full term - a significant improvement over the now-defunct Help to Buy scheme. However, borrowers must carefully consider their long-term plans, as they will eventually need to repay the loan, and the repayment amount could increase if property values rise.”

He continued: “The removal of government-backed schemes has left many first-time buyers struggling to enter the market, particularly those without access to financial support from family. By partnering with housebuilders to offer an equity loan solution, Gen H is not only helping buyers with lower deposits but also supporting developers. This product seems designed to balance consumer needs with a commercially viable model. One potential drawback is that the scheme is restricted to new-build properties, which limits buyers' choices. New-build homes are often sold at a premium.”

Michelle Lawson (pictured second from left), director and adviser at Lawson Financial, shares the concern about new properties.

“I love the innovation around the product however the new-builds are overpriced in comparison to second hand stock,” Lawson told Mortgage Introducer. “It is a shame this isn’t rolled out somehow across all property stock. Personally, I think new-builds need to come down in price rather than having to come up with schemes such as these, although the fact the boost is interest free is great. I worry that this kind of product stokes the property price fire rather than addressing the real issues which are a lot of nonsense lending policy and affordability, as well as borrowers, first-time buyers in particular, struggling with deposits.”

Richard Campo (pictured centre), head of growth at Heron Financial was cautious in his appraisal. “I suspect it won’t be a game changer, as you’d need to want to buy within a specific Persimmon site, and qualify for a Gen H loan, so geography and price point may be an issue for some, so to that end appeal will be limited,” Campo observed. “It does bring the perennial issue of Help To Buy in that you are taking a risk on house prices rising faster than your ability to buy out that portion of the funding, but even that being the case, I feel that is better than not being able to buy at all or stuck in expensive rental accommodation.

“I am surprised it has taken this long for developers to bring in their own Help To Buy alternatives, but equally, I can see that the administration of such a scheme is complicated and expensive over time. One thing I think we should see more of is cross collateralisation of property with family members.”

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How positive is New Build Boost for property buyers?

Emily Franks (pictured second from right), director of Emily’s Mortgage Services, enthused: “I think this is a really positive move for people looking to buy a new-build, so it really is a game changer in that sense. Whilst it is great that it is open to first-time buyers and homemovers, most income boosted schemes aren’t, so I think it would be great if lenders could start rewarding homeowners in the same way who are looking to make their next steps. That would free up some of the starter homes to help our property market keep pushing forward.”

New Build Boost could be ‘a great opportunity’ suggests Serena Smith (pictured right), adviser at Mortgages with Serena.

“By starting with one developer, it dips its toe into seeing if it truly works and is similar to Help to Buy, which has sadly resulted in many mortgage prisoners or customers who now don’t feel they knew fully what they were signing up for, or if it was affordable in the long run,” Smith said. “Developers often tell buyers they can only use their broker. Should this happen with this product, I fear further future problems are bound to arise when they come to remortgage.”

For Saam Lowni, managing director of Merryoaks Finance, the scheme has its pros and cons, but is a ‘great idea’.

“I believe it would make a real difference,” Lowni commented. “With the way the market is at the moment, developers are not very incentivised to develop build-to-sell schemes and borrowers are finding it difficult to get on the housing ladder - this solves both problems at the same time. The downside is it would see house prices increase again.”

For Joela Jenvey, Gen H's new product could provide valuable support for those struggling with affordability.

“Its success will depend on careful management of house prices by builders to ensure the scheme delivers genuine value,” Jenvey said. “Additionally, broader measures by lenders, such as offering higher LTV ratios and more flexible credit assessments, could help more buyers enter and move up the housing ladder in the long run.”

And Lea Bragagnini, director of brokerage, Your Family Asset, concluded: “This is very innovative, especially that they are including homemovers as people who may need to move upwards or downwards and also need help. It would be good to see other incentives bought to the marketplace by developers.”