The New Build Boost scheme requires the buyer to bring a minimum of 5% deposit and they can take out a loan for 80% of their value – an 80% loan-to-value (LTV) mortgage.
The gap is plugged by Gen H which provides a 15% interest-free ‘boost’ supported by the house builder, according to reports by the Newspage agency.
This latest addition to the mortgage market is being likened to the Help to Buy scheme, which ended in 2023, because it provides a solution to the deposit and affordability barriers which can inhibit first-time buyers.
Help to Buy Equity was a government scheme which provided buyers with a 5% deposit with an interest-free equity loan for up to 20% for a new build.
New Build Boost also provides the loan interest free. But unlike Help to Buy, which provided the loan interest-free for five years, Gen H’s product provides the loan for the entire term, which could run for the duration of the mortgage. This avoids the payment shock which those using Help to Buy encountered if they were unable to redeem their equity loan after five years, Gen H said.
The scheme has been welcomed by mortgage brokers who think it’s innovative and a much-needed addition to the first-time buyer market. However, they have added, it may not suit everyone and some were concerned it may create challenges for buyers at a later date.
Hannah Bashford, director at Model Financial Solutions speaking to Newspage, said: “Gen H are always innovating and it is great to see. The Help to Buy scheme has always had its place in the market for certain borrowers and this will be a welcome product for those struggling to get their deposit together.
“However, as with the Help to Buy scheme it doesn’t make it right for everyone and if you can buy without using the scheme, this is likely to be preferable in the long term.”
Ranald Mitchell, director at Charwin Mortgages, speaking to Newspage was sceptical. He said: “Gen H’s new scheme is Help to Buy 2.0—a repackaged trap. 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.
“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.”
