"By finding a solution to the affordability gap and steep deposit requirements faced by young people we can turn the tide on homeownership. "
A new lending platform aims to help first-time buyers onto the property ladder with a range of 'family deposit boost' and guarantor mortgage products.
Tembo's 'deposit boost' product allows older homeowners, such as parents or grandparents, to help their loved ones onto the property ladder by securing a small mortgage against the family property. Most often this is a retirement interest-only mortgage, meaning the interest is paid every month and the balance doesn't have to be paid off until either the property is sold or the family member dies. After being unlocked from the family property, the 'boost' amount is added to the homebuyer's deposit to help them buy their first home.
By helping families increase the size of first-time buyer deposits, home-buyers can achieve a better LTV and can therefore access cheaper mortgage rates. On average, Tembo has helped customers save 40% in interest charges versus low deposit alternatives over the course of a mortgage.
Tembo also offers an income boost product in the form of a joint borrower sole proprietor mortgage. This allows families to allocate some of their income to the first-time buyer's mortgage, increasing their affordability.
Tembo is the brainchild of finance and tech experts, Richard Dana, Geoff Wright and Eddie Ross, former chief product officer for Mojo Mortgages. It is backed by Aviva and Fair by Design, which includes Nationwide, Big Society Capital and Joseph Rowntree.
Tembo has already generated plans for thousands of customers, for property values totalling in excess of £700m. Its data shows that 70% of its users couldn't afford a property without the support provided by the company and the homebuyer's loved ones.
Richard Dana, CEO and founder of Tembo, said: "First-time buyers and families are being priced out of the property market. We want to make it possible for anyone to own their own home. By finding a solution to the affordability gap and steep deposit requirements faced by young people we can turn the tide on homeownership. The added bonus of what Tembo does is that by boosting the deposit, we can also save buyers tens of thousands of pounds by unlocking market-leading rates."