A core tenant of Gen H's offering, also known as Generation Home, is to “play in places that the banks don’t play” in the home-buying process.
Fundamental to this is its plan to generate additional revenue in those parts of the market and give it back to the customer.
Speaking to FTAdviser, Gen H chief executive Will Rice described it as “a bit of a Robin Hood strategy”.
The fact that they have this cheap money means they can be rubbish in all other respects — Will Rice, Gen H
This involves “taking revenue that either estate agents, mortgage brokers or lenders are monetising - capturing it and giving it back to the consumer”, he explained.
Rice outlined how the lender plans to launch its own in-house not-for-profit conveyancing service in the coming months which will see borrowers benefit from a lower interest rate as the lender “reinvests” its profits.
“On a two year fixed-rate mortgage, we’re going to be rolling out a range that will be 30 basis points cheaper when you appoint Gen H legal as your conveyancing solicitor and that reflects us giving you all of the value back,” Rice explained.
“What it will present to the customer is a premium standard service quality, it will be unique in terms of the advantages that come from the integration between our lending and conveyancing businesses - but also we will provide it to the customer essentially for free,” Rice said.
In Rice’s view, this innovation speaks to the overall philosophy of the firm.
“The big big challenge with housing, and mortgages, is the cost of capital," he said. "The funding costs of big banks and building societies presents a phenomenally large barrier to entry.
“They’ve got cheap money, you don’t have cheap money. And the fact that they have this cheap money means they can be rubbish in all other respects.
“And so our challenge in trying to transform the market is how do we deliver really competitive rates to our customers while also being able to innovate and deliver great propositions and service and change the way that the home-buying system works,” Rice said.
Gen H launched in 2020 and provides first-time buyers with ‘deposit and income boosters’. It has proven to be a success with first-time buyers and brokers alike.
Its deposit booster, a variation on the guarantor mortgage, allows an unlimited number of people to increase a buyer’s deposit.