Tembo, the ‘next generation’ lending platform, has launched a new approach to family lending for mortgages.
The lender offers a range of family deposit boost and guarantor products, which allow first-time buyers (FTBs) to lean on their loved ones to help them onto the property ladder.
Its deposit boost works by allowing older homeowners, such as parents or grandparents who are asset rich but cash poor, to help their loved ones to secure 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.
On average, Tembo has helped customers save 40% in interest charges versus low deposit alternatives over the course of a mortgage. This is based on borrowing the same overall amount, but with the loans arranged by Tembo spread over two properties.
The platform 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.
The UK faces a vast generational wealth gap between first time buyers and the over-55s. Whilst FTBs are struggling to raise the average £59,000 deposit to get on the ladder, research shows those aged over 55 hold three quarters of the UK's housing wealth. With house price rises showing no signs of dampening, this gap will widen even further in the years ahead.
Backed by Aviva and Fair by Design and Founders Factory, Tembo has already generated plans for thousands of customers, for property values totalling in excess of £700 million.
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, showcasing the lender’s ability to make homeownership more accessible.
Richard Dana, chief executive officer and founder of Tembo, comments: "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."