Launched in February 2024, the Own New Rate Reducer scheme is designed to make purchasing a new build home more affordable. Through this scheme, buyers can secure a lower mortgage rate compared to traditional options on the open market.
How It Works
When you choose a new build property, the developer agrees to contribute either 3% or 5% of the purchase price as an incentive. This contribution, similar to other perks like discounted upgrades or stamp duty coverage, is directed to your mortgage lender via Own New.
As a result, your interest payments are reduced by the equivalent value for the first 2 to 5 years, depending on your mortgage term, resulting in lower monthly mortgage payments. The scheme is even available to those with a high deposit, of up to 40% which could produce an interest rate as low as 0.99% for an initial period.
Developer-Friendly Incentives
House builders have traditionally offered incentives or discounts to buyers to secure a sale. Own New has joined up with over 60 leading homebuilders, including Barratt Developments, Berkeley Group, and Persimmon Homes, to provide this alternative incentive option.
Available Lenders
The Own New Rate Reducer scheme launched with Halifax and Virgin Money, with other lenders expected to join soon.
Downsides?
A scheme that sounds almost too good to be true and helps thousands of young professionals and other first-time buyers to get onto the property ladder. We are expecting to see a lot more use of the scheme.
Buyers should consider some downsides:
- The scheme only applies to purchasing a new-build property from a developer approved by the scheme.
- If your equity in the property is low, difficulties could be encountered when the buyer comes to remortgage the property, especially if prices have not risen over the period.
- Buyers will have to budget for a potential jump in interest payments when the initial period ends.
- Often buyers of new builds are paying a premium price for having a brand new home, as such older properties may still remain more affordable.
- Only a limited number of lenders are currently partaking.
Eligibility
This scheme is open to anyone purchasing a new build property through a homebuilder approved by the scheme and not just first time buyers.
Get in touch
Quastels’ real estate team brings extensive experience in handling new build purchases. We have collaborated with many of the home builders and mortgage brokers involved in the Own New Scheme.
Our team is qualified to guide you through the process of purchasing a new build property.
For financial information and eligibility, you must of course, contact your mortgage broker.
To discuss any of the points raised in this article, please contact Gabrielle Barnaby or fill out the form below.
