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Rich must pay for Covid borrowing binge, says IMF as global debts soar

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rich must pay for covid borrowing binge says imf as global debts soar

The wealthy should pay higher taxes to help deal with a Covid borrowing binge that has pushed global debts to a record £64 trillion, the International Monetary Fund said yesterday.

The Washington-based watchdog said the cost of protecting households, jobs and businesses has climbed to a ‘staggering’ £9 trillion, blowing a huge hole in the public finances of countries around the world.

The IMF said global debt has swelled to 100 per cent of world’s entire annual output – or around £64 trillion – as a result of the crisis, and it set to spiral in the coming years.

In a bleak report, the International Monetary Fund said the cost of protecting households, jobs and businesses has climbed to a ‘staggering’ £9trillion

In a bleak report, the International Monetary Fund said the cost of protecting households, jobs and businesses has climbed to a ‘staggering’ £9trillion

The watchdog’s head of fiscal policy Vitor Gaspar said officials should ultimately ‘adopt measures to improve tax compliance and consider higher taxes for the more affluent groups and highly profitable firms’. 

He added: ‘The ensuing revenues would help pay for critical services, such as health and social safety nets, during a crisis that has disproportionately hurt the poorer segments of society.’

The IMF stressed that most advance countries that can borrow freely are likely to be able to stabilise their debts by the middle of the decade without resorting to austerity or tax hikes in the short-term. 

This is largely because they can exploit ultra-low interest rates which makes borrowing cheap.

But the suggestion that some governments will need to increase ‘progressive taxation’ to help cover the cost of the pandemic in due course will fire up debate over how the coronavirus crisis will be paid for.

The watchdog’s intervention rankled with Tory MPs.

Andrew Bridgen said: ‘The top 1pc of earners already pay 30 per cent of taxes – so they are the ones that will get us out of this mess. You’ll never make poor people richer by making rich people poorer.’

Public borrowing in the UK is expected to hit £350billion this year and the national debt has just topped £2 trillion for the first time.

Options considered by the Treasury have included increasing capital gains tax on profits made from selling assets such as second homes and shares, and hiking corporation tax on businesses.

The IMF predicted the UK’s debt will grow to be far bigger than the size of the economy in the coming years – hitting 117 per cent in 2025. 

This would be more than twice the debt level of Germany, but still below many countries including Spain, Italy, France, the US and Japan. 

Britain’s national debt recently hit 100 per cent of GDP, the highest as a share of national income for almost 60 years.

A separate report by Paris-based think tank the OECD warned Britain’s national debt will hit 120 per cent of GDP in the coming years – which equates to around £2.4 trillon. 

It warned debt levels will become unsustainable unless action is taken.

Alvaro Pereira at the OECD said; ‘Fiscal prudence is something that, after the pandemic is over, will have to be addressed.’

Chief economist Laurence Boone said a combination of Covid and the prospect of a No Deal Brexit has made the outlook for the UK economy as ‘exceptionally uncertain’.

The OECD predicted the UK economy will shrink 10.1 per cent this year, bouncing back by 7.6 per cent next year. 

Official figures published on Tuesday showed the UK’s unemployment rate has risen from 4.1 per cent to 4.5 per cent over the summer – the highest level in three years.

This post first appeared on dailymail.co.uk

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Bugatti’s bonkers Bolide hypercar will hit 311mph in 20 SECONDS

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bugattis bonkers bolide hypercar will hit 311mph in 20 seconds

Hypercar maker Bugatti has taken its £2.5million Chrion road model and turned it into the ultimate racer that can hit 311mph in just 20 seconds.

The track-only model has been named the Bolide – which Bugatti says is French for ‘racing car’, though also [worryingly] translates to ‘fireball’ in Italian – and is powered by the quad-turbo W16-cylinder engine used in its current warp-speed road car.

With the powerplant wound right up, weight shaved to a minimum and racing-car bodywork, the Bolide has a whopping 1,825bhp and can lap the Le Mans circuit faster than the current crop of endurance racers, according to the manufacturer.

Bugatti’s boss described the driving sensation as ‘like riding on a cannonball’. 

Bonkers Bolide: Bugatti's latest creation is like a Chiron hypercar on steroids, taking an already monumental machine and turning it into an eight-cylinder track weapon

Bonkers Bolide: Bugatti's latest creation is like a Chiron hypercar on steroids, taking an already monumental machine and turning it into an eight-cylinder track weapon

Bonkers Bolide: Bugatti’s latest creation is like a Chiron hypercar on steroids, taking an already monumental machine and turning it into an eight-cylinder track weapon

The Chiron’s powerplant has been heavily tweaked for the track weapon. 

While the unit fitted to the Bolide is the same eight litres in capacity as the road car, it gets four new turbochargers and an air-to-air intercooler to keep the engine temperature at optimum levels.

The impact is a 346bhp increase in power over the ‘standard’ motor – a rise of more than a fifth – which is the equivalent of adding an Audi RS3 hot hatch to the equation.

The Bolide’s uprated motor also has 247bhp more than the Chiron Super Sport 300, which for a short period was unofficially classed as the fastest road car on the planet until it was dethroned by the SSC Tuatara earlier this month with a new record of 316mph.

The word Bolide in French means 'racing car'. However, translated from Italian it also means 'fireball'

The word Bolide in French means 'racing car'. However, translated from Italian it also means 'fireball'

The word Bolide in French means ‘racing car’. However, translated from Italian it also means ‘fireball’

Bugatti has shaved a third of the weight of the Chiron to create the Bolide
All the extra wings on the bodywork are needed to prevent it from taking off
Slide me

Bugatti has shaved a third of the weight of the Chiron to create the Bolide. All the extra wings on the bodywork are needed to prevent it from taking off

The Bolide's uprated motor also has 247bhp more than the Chiron Super Sport 300 , which for a short period was unofficially classed as the fastest road car on the planet

The Bolide's uprated motor also has 247bhp more than the Chiron Super Sport 300 , which for a short period was unofficially classed as the fastest road car on the planet

The Bolide’s uprated motor also has 247bhp more than the Chiron Super Sport 300 , which for a short period was unofficially classed as the fastest road car on the planet

With so much power on tap, the acceleration claims from Bugatti are phenomenal.

From a standing start it will hit 62mph in 2.2 seconds. To 124mph it takes just 4.4 seconds, while 186 comes up in 7.4 seconds.

Keep your foot planted and it will knock on the door of 249mph in 12.1 seconds after starting from zero, and 311mph can be achieved 20.2 seconds after it the car was at a complete standstill.

While the unit fitted to the Bolide is the same eight litres in capacity as the road car, it gets four new turbochargers and an air-to-air intercooler to keep the engine temperature at optimum levels

While the unit fitted to the Bolide is the same eight litres in capacity as the road car, it gets four new turbochargers and an air-to-air intercooler to keep the engine temperature at optimum levels

While the unit fitted to the Bolide is the same eight litres in capacity as the road car, it gets four new turbochargers and an air-to-air intercooler to keep the engine temperature at optimum levels

The Bolide can accelerate from 0-62mph in 2.2 seconds. It takes just 7.4 seconds to reach 186mph from a standing start

The Bolide can accelerate from 0-62mph in 2.2 seconds. It takes just 7.4 seconds to reach 186mph from a standing start

The Bolide can accelerate from 0-62mph in 2.2 seconds. It takes just 7.4 seconds to reach 186mph from a standing start

It takes just over 20 seconds to got from zero to 311mph, and a total of 33.6 seconds to manage that feat and get back to zero

It takes just over 20 seconds to got from zero to 311mph, and a total of 33.6 seconds to manage that feat and get back to zero

It takes just over 20 seconds to got from zero to 311mph, and a total of 33.6 seconds to manage that feat and get back to zero

Think those figures are mind-boggling? It can go from zero to 311mph and back to zero in just 33.6 seconds, which is less time than the average time it takes to write and post a tweet.  

Stephan Winkelmann, President of Bugatti, says it has ‘brute exclusivity, impresses above all with high performance, low weight, and a driving experience in a whole new dimension’ and described driving the Bolide as ‘like riding on a cannonball’.

While the tuned engine is responsible for much of this staggering performance, it’s also down to a 33-per cent weight saving from the bulk of the Chiron road vehicle.

Without fluids, it tips the scales at 1,240kg. Fully fuelled, the kerb weight will be in the region of 1,340kg, which is on par with a Ford Fiesta

Without fluids, it tips the scales at 1,240kg. Fully fuelled, the kerb weight will be in the region of 1,340kg, which is on par with a Ford Fiesta

Without fluids, it tips the scales at 1,240kg. Fully fuelled, the kerb weight will be in the region of 1,340kg, which is on par with a Ford Fiesta

The rear wing and diffuser combined to generate over 1,800kg of downforce when the car is driven at a speed of 200mph. That's like having a family-sized saloon car parked on the rear deck

The rear wing and diffuser combined to generate over 1,800kg of downforce when the car is driven at a speed of 200mph. That's like having a family-sized saloon car parked on the rear deck

The rear wing and diffuser combined to generate over 1,800kg of downforce when the car is driven at a speed of 200mph. That’s like having a family-sized saloon car parked on the rear deck

The quad exhaust pipes and X-shaped light cluster, combined with the huge wing and diffuser, give the Bolide an incredible rear-view stance

The quad exhaust pipes and X-shaped light cluster, combined with the huge wing and diffuser, give the Bolide an incredible rear-view stance

The quad exhaust pipes and X-shaped light cluster, combined with the huge wing and diffuser, give the Bolide an incredible rear-view stance

The Bolide gets a carbon chassis and body, while the fastenings are all made from aerospace-developed titanium alloy.

Without fluids, it tips the scales at 1,240kg. Fully fuelled, the kerb weight will be in the region of 1,340kg, which is on par with a Ford Fiesta. 

You can see the Chiron's DNA in the shape at the front, though it gets huge cut-out panels and X-shaped headlight units

You can see the Chiron's DNA in the shape at the front, though it gets huge cut-out panels and X-shaped headlight units

You can see the Chiron’s DNA in the shape at the front, though it gets huge cut-out panels and X-shaped headlight units

Bugatti says it can lap the Le Mans 24 hours circuit faster than the endurance race cars that took part in the event behind closed doors earlier this year

Bugatti says it can lap the Le Mans 24 hours circuit faster than the endurance race cars that took part in the event behind closed doors earlier this year

Bugatti says it can lap the Le Mans 24 hours circuit faster than the endurance race cars that took part in the event behind closed doors earlier this year

In total, the Bugatti Bolide's aero generates 800kg of downforce at 200mph at the front alone

In total, the Bugatti Bolide's aero generates 800kg of downforce at 200mph at the front alone

In total, the Bugatti Bolide’s aero generates 800kg of downforce at 200mph at the front alone

To keep the flyweight racer grounded with all that grunt, the bodywork is a mass of fins, wings and splitters, all designed to suck the Bolide into the tarmac at speed.

In total, it generates 800kg of downforce at 200mph at the front, and the massive rear spoiler creates 1,800kg at the rear – the equivalent of having a family-size saloon car parked on the backside.

The built car is running on 400mm wide slick tyres and the wheels have aero covers with turbine blades to cool the brakes.  

A quad exhaust, x-shaped rear light setup – which matches the style of the front headlamps – and one of the biggest diffusers ever put onto a car only add to the extreme looks.

Inside, it's a stripped-down racer, though there plenty of expensive Alcantara material strewn across the cabin

Inside, it's a stripped-down racer, though there plenty of expensive Alcantara material strewn across the cabin

Inside, it’s a stripped-down racer, though there plenty of expensive Alcantara material strewn across the cabin

A driver sits in minimally padded carbon-fibre bucket seats while the sawn-down steering wheel has a cluster of buttons and switches

A driver sits in minimally padded carbon-fibre bucket seats while the sawn-down steering wheel has a cluster of buttons and switches

A driver sits in minimally padded carbon-fibre bucket seats while the sawn-down steering wheel has a cluster of buttons and switches

Bugatti hasn't yet confirmed a price or production availability for the car, which is currently seen as a design exercise only

Bugatti hasn't yet confirmed a price or production availability for the car, which is currently seen as a design exercise only

Bugatti hasn’t yet confirmed a price or production availability for the car, which is currently seen as a design exercise only

Inside, it’s a stripped-down racer, with minimally padded carbon-fibre bucket seats, a steering wheel strewn in buttons and switches and a single digital instrument cluster to give the driver relevant information at a glace, including speed, gear selection, revs and lap intervals.

While it might be minimal, it’s definitely not bare, with lots of Alcantara cladding parts of the carbon interior that aren’t exposed – including a massive tunnel that divides the driver’s seat from a passenger.  

Bugatti says it shares its DNA with the brand’s Type 35 racer from the roaring ’20s, picturing the Bolide next to the vintage machine as well as a one of the EB110 works endurance racers from the 1990s.

Bolide shares DNA with Bugatti's 1920s Type 35 racer (right) and the EB110 works endurance cars from the 1990s (left)

Bolide shares DNA with Bugatti's 1920s Type 35 racer (right) and the EB110 works endurance cars from the 1990s (left)

Bolide shares DNA with Bugatti’s 1920s Type 35 racer (right) and the EB110 works endurance cars from the 1990s (left)

Is the Bolide one of the best-looking cars you've ever seen? Let us know in the comments section below

Is the Bolide one of the best-looking cars you've ever seen? Let us know in the comments section below

Is the Bolide one of the best-looking cars you’ve ever seen? Let us know in the comments section below

The Bolide produces 346bhp more than the 'standard' Chiron. That's a power rise of more than a fifth - which is the equivalent of adding an Audi RS3 hot hatch to the equation

The Bolide produces 346bhp more than the 'standard' Chiron. That's a power rise of more than a fifth - which is the equivalent of adding an Audi RS3 hot hatch to the equation

The Bolide produces 346bhp more than the ‘standard’ Chiron. That’s a power rise of more than a fifth – which is the equivalent of adding an Audi RS3 hot hatch to the equation

‘The Bolide is the ultimate answer to the question of what if Bugatti built a track-focused hyper sports car that met the FIA’s safety requirements and designed around the W16 powertrain with the minimum body structure and unbelievable performance data,’ explained Stefan Ellrott, member of the Board of Management of Bugatti and Head of Technical Development. 

‘The result: the smallest possible shell for a breathtaking performance vehicle that allows the W16 to truly come into its own.’

He added: All of Bugatti’s expertise has been condensed into the Bugatti Bolide. It is therefore an innovative information source for future technologies. The Bolide is thus more than just an intellectual exercise.’

There’s been no mention of price as yet, or how many could go into production. 

Until this month, Bugatti had - unofficially - held the record for having the fastest road car on the planet - the Chiron 300 Super Sport. It was dethroned by the SSC Taruana at the start of October

Until this month, Bugatti had - unofficially - held the record for having the fastest road car on the planet - the Chiron 300 Super Sport. It was dethroned by the SSC Taruana at the start of October

Until this month, Bugatti had – unofficially – held the record for having the fastest road car on the planet – the Chiron 300 Super Sport. It was dethroned by the SSC Taruana at the start of October

Menacing: Don't expect to see any official race teams running what is likely to be an outrageously expensive Bolide as a competition car any time soon

Menacing: Don't expect to see any official race teams running what is likely to be an outrageously expensive Bolide as a competition car any time soon

Menacing: Don’t expect to see any official race teams running what is likely to be an outrageously expensive Bolide as a competition car any time soon

CARS & MOTORING: ON TEST

This post first appeared on dailymail.co.uk

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Citroen slashes the costs of its cars as part of new ‘fair pricing’ initiative

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citroen slashes the costs of its cars as part of new fair pricing initiative

Citroen is slashing its prices – and its discounts – to make the cost of its cars ‘more transparent’ to customers in the UK whether they buy in a showroom or online.

Instead of customers having to haggle down inflated price, the French maker says it has reduced its published retail prices based on what customers usually pay on average after negotiating with salesmen.

The move also aims to protect the longer-term residual value of its cars – so they are worth more to owners when eventually sold on in the second hand market, and reduce monthly payments for those taking out PCP finance.

And in another glimmer of positive news from Citroen, bosses say the super-company Ami electric vehicle looks likely to be sold in the UK.

Price slash: Citroen UK has launched a new initiative that's designed to almost eliminate the need for customers to haggle and help keep monthly finance payments low

Price slash: Citroen UK has launched a new initiative that's designed to almost eliminate the need for customers to haggle and help keep monthly finance payments low

Price slash: Citroen UK has launched a new initiative that’s designed to almost eliminate the need for customers to haggle and help keep monthly finance payments low

The British arm of the French car maker is introducing a ‘Fair Pricing’ initiative knowing that many buyers feel uncomfortable haggling.

Dealers will still have some discretion to offer a discount, but this will be far less than in the past.  

It is one of a number of changes the car-firm is making under its new three year strategy called ‘Citroen Advance UK’.

The company said: ‘Key to the strategy is the move to fair pricing, which means reducing list prices and being transparent and upfront with the customer.

The initiative is already in place, with the price of the RRP for the C1 city car been cut by £700 from £11,015 to £10,315.

The C3 supermini and C3 Aircross Compact SUV have also had their prices slashed by up to £1,175 and £1,775 respectively.

Citroen has slashed the RRP of the C1 city car by as much as £700

Citroen has slashed the RRP of the C1 city car by as much as £700

Citroen has slashed the RRP of the C1 city car by as much as £700

The C3 Aircross - a compact SUV designed to take on the Nissan Juke - will be listed £1,755 cheaper than it currently is in showrooms

The C3 Aircross - a compact SUV designed to take on the Nissan Juke - will be listed £1,755 cheaper than it currently is in showrooms

The C3 Aircross – a compact SUV designed to take on the Nissan Juke – will be listed £1,755 cheaper than it currently is in showrooms

The firm said the new pricing strategy will be effective across the full range from 1 December with buyers ‘able to enjoy this fair and transparent pricing across Citroen’s entire model line-up’.

It noted: ‘The rationale behind this bold new approach is simple, it is about being transparent and trustworthy.

‘This long-term and fundamental change to the UK business model will see list prices across the model range reduced to new fair and transparent levels.’

While Citroen will hope this will encourage more customers into its UK dealer network, the move could also spring a backlash from previous buyers who will question if they have overpaid for their cars.

It also brings into question the pricing of new motors across the UK. 

Citroen price cut: How it affects the price of its current model range 
Model Today’s Starting Price December New Fair Pricing Starting Price Change
C1 £11,015 £10,315 -£700
C3 £16,280 £15,105 -£1,175
C3 ‘C-Series’ £16,280 £13,980 -£2,300
C3 Aircross £21,445 £19,670 -£1,775
C3 Aircross ‘C-Series’ £20,225 £17,000 -£3,225
C5 Aircross £25,655 £24,335 -£1,320
Grand C4 SpaceTourer £27,460 £26,210 -£1,250

As part of the strategy, Citroen has introduced a new and additional ‘C-Series’ range, which is aimed specifically at online buyers.

A new Virtual Showroom service offers customers the ability to book live walk-around tours of key Citroen models and to ask questions, prior to placing an order via the online store.

Citroen said: ‘New ‘C-Series’ models are offered with strong levels of standard equipment, a competitive fair price well below that of key competitors, and a five-year extended warranty for retail customers purchasing online.’ 

The maker’s UK managing director, Eurig Druce, said: ‘Our Advance UK strategy represents the next step as we continue to strengthen the Citroen brand in the UK.

‘At the heart of our strategy are fundamental, long-lasting changes to the way we do business to serve our customers better, it is the strategy our business needs today, to thrive tomorrow.’

The Citroen Ami has created it for urban areas. And you won't be able to go much further than the city, as the range is only 44 miles

The Citroen Ami has created it for urban areas. And you won't be able to go much further than the city, as the range is only 44 miles

The Citroen Ami has created it for urban areas. And you won’t be able to go much further than the city, as the range is only 44 miles

Ami likely to come to UK showrooms

In an exclusive interview with Auto Express, Druce also suggested that the ultra-compact Ami electric vehicle could be sold in the UK.

Having been granted quadricycle classification in France – partly down to its miniature dimensions of 2.41-metres long and 1.39-metres wide – it is already being sold in the manufacturer’s home land and is being offered to teenagers in Paris as a safe alternative to public transport during the coronavirus pandemic

That’s because its categorisation as a quadricycle means it can be driven by anyone over the age of 14.

A line of Citroen Ami cars seen in Paris, France, available for hire in a range of funky colours

A line of Citroen Ami cars seen in Paris, France, available for hire in a range of funky colours

A line of Citroen Ami cars seen in Paris, France, available for hire in a range of funky colours

The car is almost 8 feet long and 4.5 feet wide, which helps it fit into small parking spaces in busy and congested areas

The car is almost 8 feet long and 4.5 feet wide, which helps it fit into small parking spaces in busy and congested areas

The car is almost 8 feet long and 4.5 feet wide, which helps it fit into small parking spaces in busy and congested areas

CITROEN AMI SPECS 

Speed: 30mph

Dimensions: 8 feet long, 4.5 feet wide

Range: 44 miles

Capacity: Two passengers 

Charge: 5.5kWh lithium ion battery

Charge time: Three hours 

Price:  £5,054

The vehicles are priced at around £5,000, though most are being leased for approximately £18 a month, after a deposit of £2,350. 

Druce said it does come to Britain, it will be in left-hand drive form only. 

The UK boss told Auto Express there was a 75 per cent chance of the Ami being sold to UK customers, and confirmed that discussions are going on with Citroen’s head office in France to secure the vehicle’s availability for the UK market.

He told the magazine that it was his intention ‘in the next two to three weeks is to evaluate feedback from customers that they see with the cars here on home ground’. 

A Free2Move free-floating car-sharing service new electric car with a customised pattern. The eye-catching exteriors should attract Paris's artistic types

A Free2Move free-floating car-sharing service new electric car with a customised pattern. The eye-catching exteriors should attract Paris's artistic types

A Free2Move free-floating car-sharing service new electric car with a customised pattern. The eye-catching exteriors should attract Paris’s artistic types

The funky diminutive vehicle has contrasted hinged doors and no rear seats

The funky diminutive vehicle has contrasted hinged doors and no rear seats

The funky diminutive vehicle has contrasted hinged doors and no rear seats

The car has a basic interior to keep prices low, with UK customers likely to have to pay around £5,000

The car has a basic interior to keep prices low, with UK customers likely to have to pay around £5,000

The car has a basic interior to keep prices low, with UK customers likely to have to pay around £5,000 

The Ami is powered by a 5.5kWh lithium-ion battery that provides a driving range of up to 44 miles and a top speed of 28mph,

Charging from a conventional household plug takes just three hours. 

SAVE MONEY ON MOTORING

This post first appeared on dailymail.co.uk

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Insta-mortgages are an instant hit with new lender Generation Home

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insta mortgages are an instant hit with new lender generation home

Aspiring homeowners struggling to raise a large enough deposit to qualify for a mortgage might find they now have an alternative option – available through Instagram. 

Generation Home is a brand new mortgage lender, launching earlier this month and marketing its home loans to Britons through social media.    

While all other UK mortgage lenders require buyers to have a cash deposit, this lender lets buyers team up with friends or relatives who can ‘invest’ in the property alongside homeowners to boost their buying power.   

The rate of homeownership among young people has slumped over the  past 20 years

The rate of homeownership among young people has slumped over the  past 20 years

Home Generation is working to reverse the trend

Home Generation is working to reverse the trend

Generation Home claims to create ‘better ways’ to buy with family or friends

This model effectively means buyers with a small deposit can invite others to put some cash into their home purchase and in exchange, own a share of the property. 

Another option allows friends or family members to top up monthly payments. 

The lender was founded by husband and wife team Will Rice and Sophia Guy-White after they tried to buy their first home jointly with some friends a few years ago. 

‘This has just been a life saver’

Generation Home customers Rosalyn (25) and Peter Greenwood (23) are in the process of buying their first home

Generation Home customers Rosalyn (25) and Peter Greenwood (23) are in the process of buying their first home

Generation Home customers Rosalyn (25) and Peter Greenwood (23) are in the process of buying their first home

Rosalyn, 25, and Peter Greenwood, 23, discovered Generation Rent on Instagram.

They are currently in the process of buying their first home in Bath.

Rosalyn, a full-time mum, said that even with a 15 per cent deposit no mortgage lender could give them what they required even though they could easily afford the mortgage repayments.

Generation Rent’s ‘home booster’ option enabled Rosalyn’s Dad to use some of his income to help them borrow the necessary mortgage amount.

Peter, who works for Open Reach, said: ‘It was literally a pipe dream for ages. 

‘We really wanted to get on the market but we just didn’t see how it would be possible in our situation without saving for a further 10 years. 

‘This has just been a life saver. They have given us an option that just was not there before.’

‘When we spoke to banks, we discovered they would not consider us as a group. They only wanted to assess us a married couple,’ says Guy-White. 

‘So we began thinking about how we could offer a solution to young people like ourselves that would empower them to be able to afford more by collectively pooling together with friends and family.’

In just two weeks since first advertising through Instagram, Generation Home has received applications worth hundreds of millions of pounds – all through social media platform Instagram. 

Rice says: ‘I think we’re doing the world’s first Insta-mortgages. We have taken people from clicking through an advert on Instagram, all the way to now owning a house which is pretty exciting.’ 

While the lender is currently offering loans directly to buyers, Rice confirms their deals will be available through mortgage brokers at Mortgage Advice Network from Q1 next year and then more broadly through Legal & General’s mortgage club advisers. 

Rice added: ‘While we have our own in-house advisers, we also understand that independent advice is really important to customers, particularly to first-time buyers. 

‘We’re being very careful about who we partner with. We want to ensure that there’s a really high quality of advice provided by that third party.’  

How does it work? 

There are two options: home booster and home investor. 

The home booster option allows buyers to add a friend or family member’s income to their mortgage application so that they can afford to borrow more. 

This person – or people – can make regular payments or simply be on standby until you don’t need their support. 

The home investor option allows a friend or family member to help with the deposit. They can choose to be repaid, or to gift this money later on. 

Say you and your partner have raised £10,000 to buy your first home together. You want to purchase a property worth £200,000, meaning your deposit is equal to 5 per cent. 

At the moment, there are no mortgages available at 95 per cent loan-to-value, meaning your purchase simply can’t go ahead unless you have a willing family member who is prepared to give you £10,000 or tie it up with your mortgage lender for a fixed amount of time.

Generation Home is different. Say you have a brother and a god parent, both of whom have spare cash and want to help you get on the ladder – but not for nothing. 

Using the home investor option, Generation Home allows you and your partner to apply for a 90 per cent LTV mortgage using your £10,000 cash deposit, plus £5,000 from your brother and another £5,000 from your god parent. 

In return, your brother and god parent each own 2.5 per cent of your property, you own 95 per cent of it and it has a 90 per cent mortgage secured against it. 

Rice explains: ‘Our research has found that over 60 per cent of parents would be willing to provide greater deposit support to their children if they were able to invest alongside them with a view to getting the funds back at a later date. 

‘Their investment amount was more than double their proposed gifting amount.

‘Our deposit booster lets you do this. We provide the legal framework, securing your investment against the property and acting as your agent for the return of funds.’  

Generation Home also enables users to set specific targets on how this ownership pans out. 

The lender monitors the value of your home in real time, and offers the option of linking up banking details through secure open banking to enable it to monitor changes to income and affordability. 

It will send alerts when your loan-to-value hits a certain point – say, 80 per cent – and inform you that if you were to remortgage, you could buy out your co-owners. 

With the home booster option, those who ‘help’ boost buyers’ income and pay a small amount monthly towards the mortgage build up ‘shares’ in the property, which they can either keep and be repaid for or gift to buyers at a later date. 

The ‘deposit booster’ is the big game changer

34949584 8885765 image a 14 1603889021167

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Sebastian, 32, and Liv Miller, 31, are Generation Home’s first customers and recently completed on a maisonette in Tufnell Park in North London.

Sebastian and Liv, who both work in renewable energy, were struggling to raise a sufficient deposit in order to buy in London. By using Generation Home, some friends of theirs were able to boost Sebastian and Liv’s deposit by investing directly in the property they ended up buying.

Sebastian explains: ‘Generation Home creates a framework which removes the risk to both yourself and your friends who invest.

‘Yes, it may not offer the absolute best rates, but it’s competitive, and the ‘deposit booster’ is the big game changer because it removes the awkward conversations and side deals that would otherwise be required.

‘For the home investor, they know their money is safe, while we as a recipient felt better about it because we don’t feel like we have taken advantage of anyone.’ 

‘Each pound put towards the deposit and mortgage repayments is captured by our accounting system and reflected in each individual’s stake in the property,’ explains Rice. ‘So, if you’re paying more, you are issued with more shares.’ 

Guy-White adds: ‘Our ledger ensures the fair division of ownership in the property where the owners – and any family supporters – want to manage their finances separately.’

Examples would include an unmarried couple who keep their finances separate, siblings or friends owning together, or a parent providing repayment support for a mortgage. 

How does it compare? 

A selection of rates on offer to first-time buyers from Generation Home

A selection of rates on offer to first-time buyers from Generation Home

A selection of rates on offer to first-time buyers from Generation Home

Generation Home offers a full range of options for those looking to borrow with a deposit from 40 per cent to 10 per cent.

Rates are not the cheapest in the market, but those looking to use Generation Home are probably not able to qualify for the best buys anyway.

You’re paying a few decimal points more to be able to take advantage of the much more flexible approach to measuring what you can afford to borrow. 

Generation Home offers a two-year fixed rate up to 90 per cent loan-to-value, with an interest rate of 4.25 per cent and no fee. An option with a £999 fee is available with a lower rate of 3.99 per cent. 

 It’s a nice concept and it’s actually pretty easy to understand once you arrive on its website. It’s trying to help people onto the property ladder.
Andrew Montlake, Coreco 

In comparison, the cheapest offer currently on the market for someone looking to buy with a 10 per cent deposit is with Virgin Money which is offering a two-year fixed rate of interest at 3.64 per cent with a £745 fee.  

If you were to purchase a £200,000 home with a £180,000 mortgage over a 25-year term, your monthly repayments would amount to £918 with Virgin and £975 with Generation Home on its fee free deal. 

While the latter does cost more, most mortgage lenders have restricted the number of mortgages available to first-time buyers with less than a 15 per cent deposit amid worries that house prices could fall and an overwhelming number of applications putting pressure on their systems.

Andrew Montlake at mortgage broker Coreco said: ‘With the widespread withdrawal of 90 per cent mortgages the outlook for first-time buyers is quite bleak at the moment.

‘Especially at a time when they would want to be making the most of the stamp duty holiday.’

Montlake praised Generation Home’s ‘innovative’ and ‘inspiring’ approach to mortgage lending. 

‘It’s a nice concept and it’s actually pretty easy to understand once you arrive on its website. It’s trying to help people onto the property ladder,’ he said.

‘It has taken an innovative and inspiring approach during a time when other mainstream lenders are struggling to service first-time buyers.’  

Alternative options for buying with family 

There are several options for buyers who need help with their deposit. 

Barclays Family Springboard mortgage lets home buyers borrow up to £500,000 deposit-free at an interest rate of 3.25 per cent fixed for five years by linking their mortgage to a friend or relative’s savings.

These savings – the equivalent of 10 per cent of the value of the home – are locked away in a Barclays fixed term savings account for five years as security for the home loan, while the home buyer pays down the mortgage.

While it’s called the Family Springboard mortgage, it doesn’t need to be a family member doing the helping – Barclays says anyone with the equivalent deposit can act as the guarantor.  

On the same mortgage amount as above, monthly repayments on this deal would be £877.   

Other similar options include Family Building Society’s Family mortgage, and the Tipton’s Family Assist mortgage.

The Post Office’s Family Link mortgage is currently unavailable due to the pandemic and Post Office doesn’t yet have a date when this will be reintroduced. 

All of these restrict who can help to family members – usually a parent, whereas Generation Home doesn’t restrict who can chip into the deposit, so long as they have the money, can afford to invest it and understand how doing so will affect their own ability to borrow.  

Are there any limits on who can apply?

Generation Home requires borrowers to have the permanent right to reside in the UK whilst it does not accept applications from borrowers with bad credit.

The lender will allow for anywhere between one and six people to be on the same mortgage. 

Britain’s banking is increasingly online 

 The dawn of open banking at the start of this year promised a revolution in the way individuals manage their money, allowing different providers’ technology systems to ‘talk’ to each other if customers give their permission.

It promises customers safety online and indeed, the most recent statistics from the Open Banking Implementation Authority show over 3 million uses of API calls in July where a customer accessed a service that required open banking – up from 2 million in June. 

Guy-White says Generation Home is keen to reduce the number of documents required from purchasers by using open banking which they hope will particularly appeal to the self-employed.

This essentially allows the lender to automatically see what your financial position is so that they can give a more accurate assessment of how much you can borrow. 

While not yet available to the self-employed, they are planning to offer this ‘real-time’ affordability underwriting next year. 

This would mean no longer having to submit annual accounts and bank statements when applying for a mortgage. It would also allow for a more complex calculation on how much these borrowers can afford. At the moment, lenders typically take an average annual income based on the past three years and lend against around half of that.   

Buy-to-let is not on offer, and both Rice and Guy-White say they’ve no plans to extend into this market. 

What happens to investors’ money if couples break up?

According to Rice and Guy-White, their Generation Home agreement establishes legal parameters which removes the risk of parents losing out were their children to break up with a partner whom they had bought with.

‘The money is still theirs, it is secured against the property and Generation Home acts as their agent for repayment of the funds.’ 

Should you apply?

Raising a deposit is the greatest barrier for most young people hoping to buy their first home and Generation Home is trying to help address this.

The new lender is also offering 90 per cent mortgages which will be a huge draw considering the disappearance of these products across the sector.  

Boris Johnson might claim he is going to transform ‘Generation Rent into Generation Buy’ but at the moment Generation Home is the one putting its money where its mouth is.

This post first appeared on dailymail.co.uk

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