“Own New” Mortgage Scheme: The Doorway to New Build Homes

Mortgage

“Own New” Mortgage Scheme: The Doorway to New Build Homes

Launched in February 2024, the Own New Rate Reducer Scheme represents a pivotal shift in the UK's property market, designed by the property finance company Own New to enhance affordability and break down financial barriers, making new build homes more accessible to a broader audience.

Tin Lee

April 8, 2024

The “Own New" Mortgage Scheme: The Doorway to New Build Homes

Introduction to the Own New Rate Reducer Scheme

In the landscape of the UK's property market, the launch of the Own New Rate Reducer Scheme in February 2024 marked a transformative moment. This innovative initiative, conceived by the property finance company Own New, is strategically designed to make the dream of owning a new build home a reality for more people. With a focus on affordability, the scheme aims to dismantle the financial barriers that many face in purchasing new build properties.

Transforming the Property Buying Experience

The Own New Rate Reducer Scheme serves as a vital financial resource for prospective homeowners, providing a practical route to property ownership with more manageable costs. Through partnerships with top lenders and homebuilders, Own New has enabled access to mortgage rates that are notably lower than the usual market rates, especially during the important initial phase of the mortgage.

How the Own New Rate Reducer Scheme Works

At the core of the Own New Rate Reducer Scheme is a collaborative effort between Own New, reputable lenders, and prominent homebuilders. This synergy is pivotal in offering prospective homeowners not just a house, but a place they can afford and call home.

Securing Lower Mortgage Rates

The scheme is designed to provide homebuyers with access to lower mortgage rates, easing the financial burden of purchasing a new build home. It does so through:

Partnerships with Lenders: Working with financial institutions like Virgin Money, which offers competitive rates such as 0.99% at 60% LTV with a £495 fee for a two-year fixed term.
Long-term Benefits: Providing a variety of rates suited to different financial needs, including 1.01% at 60% LTV for a 25-year term and 4.15% at 90% LTV for a 35-year term, to ensure affordability and stability for homebuyers over time.

These initiatives reflect the scheme’s aim to make home ownership more attainable and financially viable for a broader spectrum of people, aligning with Own New’s goal of facilitating affordable housing options.

Partnering with Premier Lenders for Maximum Impact

Collaborating with Leading Lenders for Enhanced Reach

The Own New Rate Reducer Scheme benefits from the support of some of the UK's leading mortgage lenders, illustrating a strong partnership focused on improving the home buying experience. Key players in this initiative include:

Halifax and Virgin Money: These lenders are at the forefront, offering competitive rates to initiate the scheme.

Expanding Partnerships: The inclusion of Furness Building Society, Perenna, and Gen H is set to extend the scheme’s coverage and variety in mortgage options.

The Inner Workings: How Incentives Drive Mortgage Reduction

At the heart of the Own New Rate Reducer Scheme is a financial model that utilises developer contributions to decrease mortgage interest rates, benefiting all involved parties:

Developer Contributions: A portion of the property's purchase price, typically between 3% to 5%, is allocated to directly lower the mortgage interest rate.
Direct Impact: This approach facilitates reduced monthly payments for homeowners, which is particularly advantageous during the initial term of the mortgage.

Understanding Fees and Costs with Own New

The financial structure of the Own New Rate Reducer Scheme is built on transparency and affordability, ensuring the benefits are maximised for participants. Here’s a detailed look at the fee structure:

Minimal Fees: A nominal arrangement fee, calculated as a percentage of the house price, is applied. Specifically, 0.22% of the house price is deducted from the 5% house builder contribution (or 0.15% from a 3% contribution), and this amount is directed to Own New as their arrangement fee. This ensures there are no hidden costs, maintaining the scheme’s affordability and transparency.

This fee model is designed to be straightforward and fair, reflecting the scheme's commitment to making new build homes more accessible without imposing significant additional financial burdens on the buyer.

Legal Framework and Compliance

Understanding the legal structure and operational requirements is essential for engaging with the Own New Rate Reducer Scheme, which aims to provide a compliant and orderly approach to homeownership:

Specific Eligibility: The scheme is specifically designed for purchases of new build properties, with a straightforward minimum deposit requirement.
Guided Compliance: It is recommended that potential buyers consult with Pitchbook Property’s sales team to gain a comprehensive understanding of the scheme's legal framework and requirements.

These aspects demonstrate the Own New Rate Reducer Scheme’s dedication to offering a straightforward, affordable, and legally robust pathway to acquiring a new build home, ensuring clarity and benefit for future homeowners.

Direct Mortgage Relationships: Understanding the Three-Part Interaction

The Own New Rate Reducer Scheme operates through a straightforward three-part interaction involving the borrower, Own New, and the lender, essential for the scheme's operation. Here’s a clearer view of each party's role:

Borrower's Role: Individuals or entities intending to buy a new build property are the scheme's main beneficiaries. They aim to purchase a home while taking advantage of lower mortgage rates offered through Own New.
Own New's Role: Acting as the mediator in the scheme, Own New connects borrowers with lenders. Its role is to manage the process, ensuring borrowers receive reduced mortgage rates, thereby facilitating affordable mortgage solutions.
Lender's Role: Lenders, such as banks or building societies, provide the necessary mortgage finance to the borrower. They are crucial in the property purchasing process, offering terms improved by Own New’s coordination, which include reduced interest rates and better mortgage conditions.

This interaction between the three parties is central to the Own New Rate Reducer Scheme, enabling an effective and straightforward approach for borrowers to find affordable financing for new build homes.

Pros of the Own New Rate Reducer Scheme

Lower Monthly Payments: Homebuyers can enjoy reduced monthly mortgage payments in comparison to standard market rates. This scheme could lead to significant savings, particularly during the mortgage's initial term.
Choice of Schemes: Own New provides options like the Rate Reducer and Deposit Drop, giving buyers the flexibility to choose a plan that best suits their financial situation.
Broker Support: Utilising a mortgage broker, which is a requirement for this scheme, can simplify the home buying process. Brokers can help find the most suitable deals and improve the chances of a successful application. A member of the Pitchbook Property team will happily guide you to the right mortgager broker.

Cons of the Own New Rate Reducer Scheme

Future Rate Increases: While initial rates are low, there is the potential for higher rates after the initial term, especially if market rates rise.
Deposit Requirements: Accessing the lowest rates, such as the highlighted 0.99%, necessitates a substantial deposit, often around 40%, which could be a steep financial hurdle for some buyers.
Restricted Choices: Buyers are limited to new builds approved by the scheme, which may narrow the range of properties available to them.

By understanding these pros and cons, potential buyers can make a more informed decision about whether the Own New Rate Reducer scheme aligns with their home buying goals and financial circumstances.

Real-World Mortgage Savings with the Own New Rate Reducer Scheme

To illustrate the financial benefits of the Own New Rate Reducer Scheme, consider these real-world examples that demonstrate potential mortgage savings:

Example 1

For a new build home priced at £500,000, with a 10% deposit, the monthly mortgage payment could be around £1,652. This is calculated using a 2.68% interest rate available through the scheme, representing a significant saving when compared to the typical market rates at 5%.

Example 2

If the deposit on a £500,000 property increases to 20%, the monthly mortgage cost could reduce to £1,345, based on an interest rate of 2.1% offered by the scheme. This scenario highlights the considerable savings achievable over the duration of the mortgage, emphasising the scheme’s impact on long-term financial planning for homeowners.

These scenarios underscore the scheme’s effectiveness in reducing monthly outgoings for homeowners, making the prospect of buying a new build property more financially accessible and sustainable.

How to Apply for the Own New Rate Reducer Scheme

Applying for the Own New Rate Reducer Scheme is straightforward and involves three key steps:

Find Your Property: Start by looking for a new build home that's part of the scheme. There's a list of eligible properties to choose from, making it easy to find one that suits your needs and budget.
Consult with a Mortgage Broker: Next, you’ll need to talk to a mortgage broker who's familiar with the Own New scheme. They can help you understand the details and find the best mortgage option for you.
Complete the Purchase: Once you’ve got your mortgage sorted, you can go ahead with buying your new home. The team at Pitchbook Property is there to guide you through the purchase process, ensuring everything goes smoothly.

By following these steps, you can take advantage of the Own New Rate Reducer Scheme to make buying a new build home more affordable and straightforward.

Sealing the Deal

The Own New Rate Reducer Scheme is here to make buying a new build home in the UK easier and more budget-friendly. It's all about saving you money and making the buying process as smooth as possible. We've shown you how much you could save with real examples and walked you through how to get started with the scheme. Essentially, it's about turning the dream of owning a home into something you can realistically achieve.

Thinking about getting a new build property? Get in touch with Pitchbook Property to find out how the Own New Rate Reducer Scheme can make your path to home ownership smoother and more affordable. Let’s help you take that crucial step to own a home that fits your budget and fulfils your dreams.