A Deposit Booster helps home buyers with the deposit. But instead of simply gifting the money, they contribute to the deposit via a loan. This gives them protected financial interest in the property.
Gift vs Loan
This is a personal decision for everyone, but there are some key advantages to a loan over gifting. Here are a few:
You may want or need the money back in the future.
You keep your options open as you can always gift part or all of your stake later.
You may not like the idea of giving a handout but are willing to provide a necessary leg-up to get them started.
You may be wary of break-ups, which would mean your money could go out the door.
You may be able to help multiple children onto the property ladder with the same pot of money.
How does the Deposit Booster loan work?
The loan can be either a deposit loan, which means they'll be repaid the loan amount, or an equity loan, the balance of which increases or decreases depending on changes in the house price, so you have the economic exposure of a homeowner.
With an equity loan, if the home increases in value, the value of your financial stake would increase too. If the home decreases in value, so does your stake. Loans can be converted into a gift any time.
A Booster’s capital is ring-fenced to preserve a First-Time Buyer’s Stamp Duty status.
An owner can repay the loan in part or in full at any time via the Generation Home platform.
At remortgage or at sale
A Deposit Booster can request to be repaid at specified events such as the sale of the property or when remortgaging occurs and equity can be released.
Homeowners and Boosters can also set an LTV trigger so that the loan is repaid once the mortgage with Generation Home falls to a pre-agreed level.
We manage the loan for the Deposit Booster, providing the legal structure and controlling repayment.