Its first product provides an innovative solution to help home buyers get on the housing ladder by increasing the size of deposits by leveraging the income and assets of willing family members ..
Families can now help their loved ones with buying their homes without the need of a cash lump sum as Tembo, the next generation lending platform backed by Aviva and Fair by Design (which includes Nationwide, Big Society Capital and Joseph Rowntree), launches a new approach to family lending for mortgages. Tembo offers a range of family deposit boost and guarantor products which allow first-time buyers to lean on their loved ones to help them onto the property ladder.
Tembo’s deposit boost works by allowing older homeowners, such as parents or grandparents, who are asset rich but cash poor to help their loved ones onto the property ladder by securing 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.
By helping families boost the size of first time buyer deposits, home-buyers can achieve a better loan to value ratio (LTV) so have the opportunity to access cheaper mortgage rates. 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.
Tembo 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 first-time buyers are struggling to raise the average £59,000 deposit (rising to an eye-watering £132,685 in London)1 to get on the ladder, 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.
Tembo is on a mission to transform home ownership and turn the tide on the generational wealth gap. By delivering a fast, affordable way to increase a buyer’s deposit and close the affordability gap. Tembo can help young people and families get into their homes quicker, and avoid boomeranging back to stay in the family home or getting stuck in the rent-cycle.
Richard Dana, CEO and founder of Tembo said: “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.”
Tembo has already generated plans for thousands of customers, for property values totalling in excess of £700m. 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 Tembo’s ability to make homeownership more accessible. The company’s ethical approach to homeownership has attracted support from leading ethical investor Fair by Design, Big Society Capital, Joseph Rowntree Foundation and Barrow Cadbury.
Tembo is the brainchild of finance and tech experts, Richard Dana, Geoff Wright and Eddie Ross, former Chief Product Officer for Mojo Mortgages. The startup is supported by the biggest players in finance and technology, including Aviva, Fair By Design and Founders Factory.