Gen H has announced the staged launch of an interest-only proposition for first-time buyers, homemovers and remortgagers.
The first phase, a full interest-only product, will be available to brokers on the lender’s panel from today.
Phase 1 sees the launch of interest-only for first-time buyers and home movers. This proposition is ideal for young professionals and self-employed first-time buyers, allowing them to prioritise both homeownership and saving or investment goals.
Phase 2, live this summer, will be interest-only with a boost. Income boosters can contribute the repayment strategies, leaving their investments, such as a buy-to-let or pension pot, intact longer so it can grow more.
Phase 3 will include part-and-part to maximise affordability – even with small deposits. Borrowers can top up a capital repayment mortgage with an interest-only portion to boost affordability, or top up an interest-only mortgage with a capital repayment portion if the repayment strategy isn’t quite there. Part-and-part will launch in autumn this year.
The maximum LTV is 80% and the minimum household income is £50,000. The proposition will have its own product range and will launch with a rate of 5.09% at 60% LTV. The term can go to the eldest borrower’s 75th birthday or retirement, whichever is earlier. Acceptable repayment vehicles include sale of the mortgaged property (maximum 60% LTV + minimum £200,000 equity), sale of another property, investments, and pension, with regular savings, cash and bonus income coming soon.
According to Gen H’s projections, where there is a credible repayment strategy, an interest-only mortgage can create the equivalent of a 10-15% boost in affordability over a 30-year term.
Pete Dockar, chief commercial officer at Gen H, said: “Housing affordability challenges are here to stay, and helping everyone access homeownership and build long term wealth requires us to consider how familiar tools can be used in new ways. Interest-only is a perfect example – it has long been considered a tool for the rich, but as one of the UK’s only lenders creating truly incremental homeowners, we believe it can support first-time buyers as well.
"An interest-only mortgage can spell the difference between staying locked in the rental cycle or accessing homeownership and building meaningful wealth over time. What’s more – too often we expect aspiring buyers to either save or own, but for some, interest only can be the tool that lets them do both – while boosting affordability at the same time.
"I am confident that our panel of intermediaries will wield this new product with precision – interest only can be a game changer for the right financially-savvy clients. We are delighted to bring this to market and look forward to launching phases 2 and 3 to support even more people in the coming weeks and months.”
