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Own New Home Purchase Scheme: Making Home Ownership More Affordable

Updated: Nov 1

Are you a first-time buyer or home mover looking to step onto the property ladder? Navigating the world of new build mortgages can be daunting, especially with so many schemes and options available. However, the Own New Rate Reducer scheme stands out as a revolutionary way to make home buying more affordable. By leveraging developer incentives, this scheme makes it easier and cheaper to buy a new build home. Our comprehensive guide will introduce you to the Own New Rate Reducer scheme, explain its workings, and help you decide if it's the right choice for you.


An image showing an interest rate symbol stepping down a series of stairs, each step symbolising a reduction in fixed rates. The visual representation highlights the Own New Rate Reducer home purchase scheme, which provides low interest rates for buyers of new build homes.
Own New: Lower Rates Now!

Understanding the Own New Home Purchase Scheme

The Own New Rate Reducer home purchase scheme is not just another mortgage option. It's a scheme specifically designed to assist potential homeowners in securing more favourable mortgage terms when purchasing a new build property. By collaborating with home builders and lenders, this initiative helps reduce the financial burden on homebuyers, making the dream of owning a new build home more attainable.


How Does the Rate Reducer Work?

The scheme operates by using a developer's contribution to lower your mortgage interest rate for the initial years of your mortgage. When you buy a property through the Own New scheme, the developer agrees to contribute a percentage of your property's purchase price directly to your mortgage lender. This contribution reduces your mortgage interest rate, resulting in lower monthly payments for a set period, typically the first two to five years.


Who Can Benefit from the Scheme?

This innovative scheme is open to a wide range of potential buyers. Whether you're a first-time buyer, a home mover, or someone who has owned property in the past, you can benefit from the Own New Rate Reducer. It’s a flexible option that aims to make home ownership more accessible to a broader audience.


Why Consider the Own New Rate Reducer?

Lower Initial Mortgage Rates

One of the most attractive features of the Own New Rate Reducer is the significantly lower mortgage rates you can access. In some cases, rates can be as low as sub-1%, allowing you to manage your finances more effectively during the early years of home ownership.


Minimal Deposit Requirements

For many prospective buyers, saving for a deposit is a significant hurdle. The Own New Rate Reducer allows you to secure a mortgage with as little as a 5% deposit, easing the financial burden and making it possible to own a home sooner.


Paying Off More Capital

With reduced interest rates, a greater portion of your monthly payments goes towards paying off the capital amount borrowed. This means you are building equity in your home faster than with a traditional mortgage option.


What are the drawbacks?

Limited Property and Lender Options

While the benefits are compelling, the Own New Rate Reducer does come with some limitations. You’ll need to select a property from developers participating in the scheme, which may limit your choices. Similarly, the number of lenders offering mortgages through this scheme is currently limited, although this is expected to expand over time.


Potential for Rate Increases

Once the initial rate reduction period ends, you could face a significant increase in your mortgage payments. It’s essential to plan for this and consider your long-term financial strategy to avoid potential financial strain.


The New Build Premium

Purchasing a new build property often comes with what is known as a 'new build premium'. This means the property might depreciate once you've moved in, especially if you need to sell within a short time frame. It's crucial to weigh this against the benefits of the scheme.



Understanding the Mechanics Own New

Developer Contributions

The key to the Own New Rate Reducer’s appeal lies in the developer's contribution, typically 3% or 5% of the property's purchase price. This contribution is channelled through Own New to your mortgage lender, effectively reducing the interest rate on your loan for a specified period.

 

 Fixed Rate Terms

The scheme offers two fixed-rate terms—two or five years. During this time, your interest rate remains unchanged, providing you with predictable, lower monthly payments.


Eligible Developers and Lenders

Participating Developers

Own New has partnered with several prominent developers to offer this scheme, including Barratt Developments, Persimmon, Taylor Wimpey, Bellway, Berkeley Homes, and Davidsons Homes. These developers offer a wide range of properties, providing potential buyers with various options.


Mortgage Lenders

Not all lenders participate in the Own New Rate Reducer scheme. The scheme now includes options from Halifax, Virgin Money, Leek Building Society, Perenna, Darlington Building Society, and Furness Building Society. It's advisable to research and consult with a mortgage broker to understand the best options available to you.


How Do I Apply for the Own New Purchase Scheme

Finding the Right Property

Start by identifying a new build property from a participating developer. Research each developer’s offerings to find a home that fits your needs and budget.


Securing Your Mortgage

Once you’ve selected a property, work with an approved Own New mortgage broker to explore your mortgage options. Brokers like us are familiar with the intricacies of the scheme and can provide valuable guidance.


Completing the Purchase

After securing your mortgage, proceed with the standard new build purchase process. Unlike shared ownership schemes, you will own 100% of your home upon completion.



An image depicting a model house held gently in an open hand, bathed in warm sunlight streaming through a window. The scene symbolises the promise of new beginnings and the opportunity to own a new build home through the Own New purchase scheme. The sunlight highlights the optimism and potential of starting fresh in a new home.
Own New: Bright Beginnings

What are the alternatives to Own New?

While the Own New Rate Reducer offers compelling benefits, it's not the only route to home ownership. Consider alternative schemes such as: 

 

95% Mortgages

These mortgages, supported by the Mortgage Guarantee Scheme, allow you to purchase with a small deposit while offering a wider choice of properties beyond new builds.


Shared Ownership

Although more complex, shared ownership allows you to purchase a share of a property and pay rent on the remaining portion. Evaluate the pros and cons before deciding.


100% Mortgages

Recently launched by Skipton Building Society, these mortgages require no deposit, appealing to first-time buyers with a proven track record of paying rent.


For more information on the various home purchase schemes, visit Which Home Purchase Scheme Is Right For Me?

 

Conclusion

The Own New Rate Reducer scheme represents an innovative way to make home ownership more accessible for first-time buyers and home movers. With lower initial mortgage rates and minimal deposit requirements, it offers a financially advantageous start to home ownership. However, it's crucial to weigh the potential drawbacks, including limited options and future rate increases. By carefully considering your options and consulting with experts, you can make an informed decision that aligns with your financial goals.

 


Your home may be repossessed if you do not keep up repayments on your mortgage.

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