First-time buyers in London are purchasing their homes six years earlier when using an income booster, according to a new report from Gen H.
The analysis found that those using the initiative are purchasing their first homes at an average age of 29, six years earlier than the typical first-time buyer age in the capital.
This accelerated entry onto the property ladder offers significant financial benefits, allowing buyers to accumulate home equity earlier, rather than continuing to pay rent.
Gen H’s analysis suggests that this additional six-year homeownership window could translate into approximately £37,427 in equity repayments and a gain of £62,401 from house price appreciation.
This is based on market conditions, including average house prices, mortgage interest rates, and rental costs.
Altogether, a first-time buyer would have spent around £101,697 in monthly mortgage payments, compared to an equivalent of £132,464 that renters would have spent, illustrating the financial impact of earlier homeownership.
What is an income booster?
The income booster concept enables close family or friends to increase the mortgage application’s borrowing power by including their income alongside the buyer’s, even if they don’t live in the property.
This improves the borrowing power of the buyer, without becoming a co-owner.
Gen H says that, without this support, an average buyer in London would need to borrow around eight times their income to afford a home. With an income booster, this figure reduces dramatically to just 2.7 times the combined income.
This mechanism thus improves accessibility to homeownership without requiring additional upfront cash.
Pete Dockar, chief commercial officer at Gen H, emphasised the broader value of homeownership beyond finance.
Speaking to Mortgage Solutions, Dockar underscored the benefits, such as enhanced security, community investment, and overall quality of life.
He said: ‘A £130,000 leg-up is huge in your mid-30s – but imagine how this advantage could grow over the decades. And there is no extra cost to adding an income booster – this is simply homeownership sooner, and that benefit could literally last a lifetime.’
The income booster structure allows incomes from friends or family to be included in the mortgage application without granting them ownership rights or listing them on the property deeds. Consequently, first-time buyers retain eligibility for stamp duty relief.
Income boosters can be removed once buyers can afford mortgage payments independently, usually via remortgaging.
And while contributors may help cover monthly payments, these contributions are classified as gifts, protecting the homeowner’s legal ownership.
Gen H first brought its income booster proposition to market in 2020. Alongside this, their New Build Boost scheme grants a 15% interest-free ‘boost’ to deposits, aiding buyers who hold only a 5% deposit to qualify for mortgages more readily.
Recent moves by Gen H lowered the New Build Boost interest rate from 6.29% to 5.95%, aiming to reduce monthly costs and further widen access.
With government schemes such as Help to Buy now concluded, these private sector initiatives are seen as crucial alternatives to address the persistent affordability barrier in London’s expensive property market.
Together, income boosters and deposit assistance schemes demonstrate innovative financial pathways to assist aspiring homeowners.
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