Own New Launch New below 1% Mortgage Products with Halifax and Virgin Money on New Builds

In a bid to revolutionise mortgage financing, Own New has teamed up with industry giants Halifax and Virgin Money to introduce a game-changing product: the Own New Rate Reducer. This innovative offering promises to lower rates on new build homes, potentially dipping below the remarkable threshold of 1%. Initially available through Barrett Homes, with plans to expand to other leading house builders in March, the Own New Rate Reducer aims to redefine affordability in the realm of homeownership

The primary objective of the Own New Rate Reducer is to ease the burden of initial mortgage payments by offering reduced rates for the first two to five years of homeownership. This initiative is set to benefit homebuyers with substantial deposits or equity, potentially granting them access to historically low rates

How does Own New Rate Reducer Work?

Homebuilders will allocate the incentives traditionally offered to buyers upfront to diminish mortgage payments instead. For instance, if a housebuilder extends a 5% incentive, buyers can choose to apply this incentive over a period of two or five years to lower their mortgage payments, subject to lender criteria.

Virgin Money said with the incentive budget being invested in the mortgage upfront, for a new home worth £300,000 its introductory two-year mortgage rate of 4.79% with a £999 fee for someone who needed to borrow 65% of their property’s price (65% loan-to-value – LTV), the rate could be cut to 0.99% at 60% LTV with a £495 fee.

By cutting the monthly payments initially the customer is able to pay more of their mortgage balance due to the lower interest charged.

Applying for a low rate mortgage

Lenders will still carry out the standard affordability assessments to ensure the mortgage is still affordable after the incentive period.

Product will be a ‘significant boost’ to new-build purchases

Eliot Darcy, founder of Own New, said its “ethos is to make homeownership open to more people, and we are confident that the launch of the Own New rate-reducer will achieve that”.

He said: “We, and the national lenders and housebuilders who have signed up to the scheme, believe that rate-reducer will be a significant boost to many people’s homebuying dreams.

“By working together, we are increasing mortgage lending opportunities and bringing the possibility of owning a new-build home to a wider range of buyers. This is just the product to stimulate the housing market and give more people a helping hand to get onto the property ladder or to secure that new home that will give them the extra space they need.”

Harps Garcha at Brooklyns Financial said: “A new initiative from developers offers relief for first-time buyers and house movers amidst rising mortgage payments. Buyers should tread cautiously. 

“While these new homes may seem enticing, they often come with a premium price. Opting for a non-new house could mean lower monthly payments due to the lower value of similar properties.

“Once the initial fixed-rate period ends, mortgage holders may face affordability challenges, mirroring the recent trend of rising mortgage payments. Even with a larger reduction in the mortgage balance, the premium paid initially could negate any significant savings.

“Buyers must consider potential hurdles like lack of equity and remortgaging complexities, akin to issues seen with 'Help To Buy.’

“In light of these factors, while the new build initiative offers a glimmer of hope for buyers, it's essential to weigh the potential risks and benefits carefully before diving in.”

If you are looking to purchase your first home or simply looking for a new deal on your current property, it is important to get advice. Speak to one of our experienced mortgage consultants who can help find the best deal for you. Contact our team or call 01628 564631 to book a free consultation.

The information contained within was correct at the time of publication but is subject to change.

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