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Gen H enables friends to act as income boosters for mortgages: "But those helping a borrower need to beware of the impact on their own finances"

Journalist: Justin Moy, Contributing Editor

ended 17. July 2024

Gen H has announced that they will now allow friends to act as income boosters for mortgages up to 80% Loan to Value, whilst extending immediate family to include nieces and nephews up to 95% Loan to Value.

This change in criteria is ideal for those who need some additional income to help purchase a property that may be out of reach on standard affordabilty. It's an innovative approach to JBSP (Joint Borrower, Sole Proprietor mortgages), giving homebuyers that extra ability to buy their home.

A review of Gen H’s recent cases found that 62.4% of owners with income boosters are under the age of 40, but a significant proportion (37.6%) are over 40, with 16.4% over 50. Further, in the 5 months following November 2023, 72.9% of income booster apps were from first-time buyers and 24.7% were remortgagers, representing a 50% uplift in remortgages with income boosters.

Will Rice, Gen H CEO, said: “We’ve seen how many people our income booster product has been able to help. This is why, when our brokers began requesting that friends be able to act as income boosters, we took note. I’m delighted to introduce this change, especially in light of two consecutive rate reductions, because it means we’ll be able to support even more aspiring homeowners. This important development is thanks to the attention and advocacy of our broker partners.”

The lender’s announcement follows on two consecutive weeks of rate reductions, where Gen H slashed homebuying bundle rates by up to 40 bps and reduced 5-year homebuying and standard rates up to and including 80% LTV by a further 15 bps on the 15th of July.

Newspage asked brokers if this is a positive move by Gen H, whether the use of JBSP mortgages fills a gap in the market, and if the popularity of these schemes will grow over the coming years. Their views are below.

5 responses from the Newspage community

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Editor
Justin Moy
Managing Director at EHF Mortgages
Any innovation is superb for the mortgage market, and this extension of Gen H's policy will allow more buyers to afford their first or subsequent properties by going down the joint borrower and sole ownership route. But those helping a borrower need to beware of the impact on their own finances. After all, the mortgage will become a commitment on their own mortgage applications and will limit their own financial capacity. With older family it may not be so much of a problem, but if friends are of a similar age, this could create an uncomfortable issue when they wish to move or refinance.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Anything that can help more people get onto the housing ladder should be welcomed, but the friends or family members in question need to go in eyes wide open. Having your income used to assist a friend's mortgage could have a potential impact on your own credit file and personal borrowing potential in the future. This would make you a true friend in(mortgage)deed.
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Michelle Lawson
Director at Lawson Financial
This is a great piece of much needed innovation but buying a property is a costly investment and not an easy exit in the event of friendship fall-outs and changes of circumstance. As long as all parties are aware of their obligations and this is advised well, it could be useful for some. However, buying property involves a lot more commitment than playground transactions.
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Dariusz Karpowicz
Director at Albion Financial Advice
This is a very good move and criteria enhancement by Gen H, much needed in this day and age when wages do not keep up with house prices. This sort of innovation is essential and should be adopted by other lenders. I can definitely see more enquiries for JBSP mortgages moving forward. Extending income booster options to friends and extended family is a smart way to fill a gap in the market, making homeownership more accessible for many. This approach is especially helpful for first-time buyers and those struggling with affordability, and its popularity is likely to rise in the coming years.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The Gen H proposition is a great one and any extension to it is welcome. The only hinderance I'm finding with clients is the rates; as one put it recently "my commercial mortgage has a lower rate than that!" It's a shame as they do JBSP so well and I hope that they are ablet o reduce rates and compete more directly with the established lenders. JBSP is effectively a re-branding of the Guarantor mortgages we saw a decade ago, they are incredibly useful when done properly and allow family members to help each other to buy a property, which can be invaluable for first-time buyers, but also those looking to buy after a relationship breakdown too.