A brand-new mortgage scheme promising to make homeownership more affordable has just hit the market – but is it really the golden ticket buyers have been waiting for?
Gen H’s “New Build Boost” is offering hopeful homeowners an interest-free equity loan of 15% to help secure a new-build property with just a 5% deposit.
The scheme closely resembles the now-defunct Help to Buy scheme, which ended in 2023.
While some experts welcome the initiative, others warn it could trap buyers in expensive mortgages with limited exit routes.
The scheme allows buyers to get on the property ladder with a 5% deposit, while Gen H provides an interest-free loan of 15% of the property’s value. The remaining 80% is covered by a standard mortgage.
For a home priced at £281,000, this means:
A £14,050 deposit (5%)
A £42,150 interest-free loan (15%)
A £224,800 mortgage (80%)
Unlike Help to Buy, which started charging interest on its loan after five years, Gen H’s loan remains interest-free for the full mortgage term. However, it must be repaid when you remortgage, sell, or at the end of the mortgage term – and it increases in value if your home’s price rises.
On the surface, it sounds like a dream deal for first-time buyers. But mortgage experts have mixed feelings.
David Hollingworth of L&C Mortgages calls it “the closest thing to a direct replacement for Help to Buy” and praises the fact that the loan is interest-free for its full term.
But not everyone is convinced. Mortgage expert Ranald Mitchell brands it “Help to Buy 2.0 – a repackaged trap.”
He told Newspage: “A lower 15% equity loan doesn’t fix the real issue: getting out. Buyers will step into shiny new homes, only to find limited mortgage options down the line, leaving them stuck.”
There’s also the matter of the mortgage rate. The Gen H mortgage is currently set at 6.49% – significantly higher than the rates offered by other lenders, which hover around 5% for those with a 5% deposit.
While the equity loan reduces monthly repayments slightly, buyers will still need to repay the full loan amount later – and if house prices soar, so will their loan balance.
Is this the game-changer buyers need, or just another sticking plaster on Britain’s broken housing market?
Justin Moy of EHF Mortgages thinks it’s a “great initiative,” particularly for those struggling with high-interest payments on traditional mortgages. But Michelle Lawson of Lawson Financial argues it doesn’t solve the real issue, saying: “We need to be looking at the root cause of the problem. The best way to beat affordability ultimately comes down to building more affordable homes.”
So, while Gen H’s scheme might help some buyers take their first step onto the property ladder, experts urge caution.
Buyers must carefully consider the long-term implications before jumping in – or risk being locked into a mortgage they can’t escape.
