What is the New Build Boost Scheme?

The New Build Boost scheme is specifically designed to make new build homes more accessible. Its key benefit is an interest-free equity loan that significantly reduces the initial mortgage requirement, making homeownership more achievable with a lower upfront deposit.

Unlike traditional government-backed equity loan schemes, this scheme is offered by private enterprise, Generation Home, in partnership with specific homebuilders, to help buyers secure their dream new build home.

Under the New Build Boost scheme, you typically need just a 5% deposit. A lender, Generation Home, provides an 80% Loan-to-Value (LTV) mortgage, and the remaining 15% comes from an interest-free "boost" equity loan, also provided by Generation Home and supported by the housebuilder (currently Persimmon and Charles Church). For example, on a £300,000 home:

• Your 5% deposit would be £15,000.
• The 15% interest-free boost would be £45,000.
• Your 80% mortgage requirement would be £240,000.

How Does the New Build Boost Scheme Work?

The New Build Boost scheme is an innovative private sector initiative designed to offer a solution for homebuyers who may struggle with larger deposits or high Loan-to-Value (LTV) mortgages.

New Build Boost is provided by a specific lender, Generation Home, in collaboration with major housebuilders Persimmon and Charles Church. It works by bridging the gap between your deposit and the main mortgage, reducing the amount you need to borrow from a standard mortgage lender.

Here’s how the New Build Boost works:

• 1You provide a deposit of just 5% of the property's purchase price.

• 2Generation Home provides an interest-free equity loan (the "boost") equivalent to 15% of the property's value. This portion is interest-free for the entire loan term, as long as it remains within the terms of the agreement.

• 3You secure a standard mortgage for the remaining 80% of the property's value from Generation Home.

This structure means you only need to fund a small deposit, while the remaining equity is covered by the boost and your main mortgage. It's a strategic way to make a new build home more affordable upfront.

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Who is eligible for New Build Boost?

To qualify for the New Build Boost scheme, you'll need to meet specific criteria:

• Location: The new build property you are purchasing must be located in England. The New Build Boost scheme is currently not available in Scotland or Wales.
• Property Type: You must be purchasing a new build home from an approved developer, currently Persimmon Homes or Charles Church.
• Deposit: You will typically need a minimum deposit of 5%. The scheme supports deposits ranging from 5% up to 15% of the property's value. If your deposit is higher than 5%, your main mortgage will be adjusted accordingly, but the 15% boost remains fixed.
• Buyer Status: The scheme is open to both first-time buyers and existing homeowners who are looking to move into a new build property.
• Mortgage Assessment: As with any mortgage application, you will need to meet Generation Home's standard lending criteria, which includes affordability assessments and credit checks. The scheme allows you to be assessed against 80% Loan-to-Value (LTV) criteria, potentially enhancing your borrowing power.
• Primary Residence: The property you purchase must be your primary residence; the scheme is not available for buy-to-let investments.

It's always recommended to speak with a qualified mortgage broker or directly with Generation Home to get an assessment of your eligibility based on your individual financial circumstances.

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Is the New Build Boost equity loan really interest-free?

Yes, the 15% 'boost' equity loan offered through the New Build Boost scheme is genuinely interest-free for its entire term. This is an advantage that sets it apart from some other equity loan schemes, including the former Help to Buy scheme, which started charging interest after five years.

With New Build Boost, you will not be charged any interest or ongoing management fees on the 15% equity loan portion. This means your monthly housing costs are simplified, as you only pay interest on the 80% main mortgage with Generation Home.

Key points on the equity loan repayment

• Interest-Free Forever: Unlike some past schemes, there are no deferred interest charges that kick in after a few years. The 15% boost remains interest-free for as long as you have the loan.
• Equity Freeze for 5 Years: For the first five years of the loan, the repayment value of your 15% boost is 'frozen' at its original amount. This means if you repay the boost within this initial five-year period, you only pay back the exact amount you originally borrowed, regardless of any increase in your property's value during that time.
• Value Adjusts After 5 Years: After the initial five-year freeze, the value of the 15% equity loan will adjust upwards or downwards in line with the current market value of your property. If your home's value has increased, the amount you owe on the equity loan will also increase proportionately. Conversely, if your property's value has decreased, the amount you owe will also reduce.
• Repayment Cap: To protect house price growth, Generation Home caps the repayment value of the boost at twice its original amount. So, no matter how much your property increases in value, you'll never have to repay more than double what you initially borrowed for the boost.
• Mandatory Repayment Triggers: You are required to repay the boost in full when you sell the property, repay your main mortgage (e.g., when remortgaging to another lender), or at the end of the mortgage term.
• Voluntary Repayments: You can typically make full or partial repayments of the boost at any time. Partial repayments must be for a minimum amount (e.g., £100 after the first year, with specific conditions).

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