The buyer brings at least a 5% deposit and takes up to 80% of their mortgage on an interest-only basis, while taking the remainder on a capital repayment basis.
Gen H said buyers would own 100% of their home from day one and can overpay as normal to bring down the capital balance.
Borrowers will need a household income of at least £50,000 to be eligible.
Gen H said this part and part deal was aimed at renters with a small deposit who cannot currently afford a standard capital repayment mortgage for their desired property.
It explained that part and part mortgages have more “flexibility”, as buyers who cannot quite get the loan amount they need can add an interest-only portion to boost their affordability.
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On the flip side, buyers who want an interest-only deal but don’t have a full repayment strategy can top up their deal with a capital repayment portion.
Gen H said around 18% self-employed borrowers, next-time buyers and remortgagers used interest-only deals, compared to only 1% of first-time buyers.
Back in 2007, Gen H said around half of first-time buyers used interest-only deals.
It said the deal was partially due to a lack of financial education and a “misconception that interest-only is just for the wealthy”, but it can be a “powerful tool for [fine]-tuning your affordability”.
Pete Dockar (pictured), Gen H’s chief commercial officer, said, “For most people, the path to homeownership isn’t straightforward. In a country where the average house price is eight times the average salary – to say nothing of places like London – the best mortgage products are those that can be carefully tailored to suit the needs of individual buyers.
“Part and part mortgages do exactly that. No more renting. No need for family help. And unlike shared ownership, there’s no staircasing, no frustrating administration, and no rent to be paid; just 100% homeownership from day one. We are thrilled to make this product available to our broker panel and to the growing number of clients they may now be able to support.”
Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau (MAB), said: “Buying a home is one of the most significant ways to build wealth. In fact, our research shows that by continuing to rent, aspiring homeowners could be missing out on up to £340,000 in potential wealth acquisition over 30 years. However, many renters believe that owning a home is completely out of the question.
“The good news is that homeownership is often more accessible than people think. It’s our job as brokers to shine a light on the many low-deposit solutions available, instilling more buyers with the confidence to buy sooner.
“We’re delighted to be working with Gen H on the launch of their new part and part mortgage, which will be a game-changer in helping even more reluctant renters become homeowners.”
Gen H has been widening its proposition in recent months, launching an interest-only proposition and New Build Boost. Since it was launched, the New Build Boost’s approvals in principle have hit over £90m.
