Lifting the lid on the magical benefits of the ‘Own New Rate Reducer’ scheme

Navigating the UK mortgage jungle just got a tad easier with the launch of the ‘Own New Rate Reducer Scheme’ in February 2024. Where mortgage rates don’t just dip. They do a full-on swan dive. It’s hailed as the latest magic trick by Own New, a property finance maestro that’s teamed up with lenders and homebuilders, to make owning a new build not just a dream but a very achievable reality.

With this fresh initiative, promising you mortgage rates that seem to have hit rock bottom and a mortgage comparison dream. The ‘Own New Rate Reducer Scheme’ is practically rolling out the red carpet for homebuyers into the world of new property builds. And with lowered UK mortgage interest rates for the get-go. You’re not just buying a house; you’re building equity faster than you can say ‘nationwide mortgage open sesame’.

So what exactly is the ‘Own New Rate Reducer’ Scheme?

The Own New Rate Reducer Scheme is a sparkling new initiative designed to make your leap into homeownership not just a dream, but an affordable reality. Imagine this: mortgage rates so low, they make limbo dancers jealous! Let’s lift the curtain on how it really works…

Collaborative sorcery: This scheme is a powerhouse partnership among over 60 homebuilders like Barratt Developments, Bellway, and Taylor Wimpey, and lenders including the likes of Virgin Money and Halifax. More are expected to join the bandwagon, making it a robust industry collaboration.

Eligibility is a breeze: It’s open to every Tom, Dick, and Harriet, whether you’re a first-time buyer or looking to move. The catch? You just need to be buying a new build property.

Magical mortgage rates: Start your homeownership journey with rates starting at a mouth-watering 0.99% for a two-year fixed-rate mortgage at 60% LTV. Yep, you read that right!

Showy savings: By applying through this scheme, the savings are significant compared to the open market. Like having your cake and eating it too.

Contribution voodoo: The property developers will contribute 3% or 5% of the purchase price. Which Own New channels to your lender, reducing your mortgage interest rate substantially for up to 5 years. This means lower monthly payments, giving you more cash to splash each month.

Eco-wizadry: Not just easier on your pocket, the scheme also promotes energy-efficient, modern new builds which are a win-win for both your wallet and the planet.

What exactly is the 5% deposit unlock scheme and who can use it?

The 5% Deposit Unlock scheme is a program that enables prospective homeowners to purchase a new build property with only a 5% deposit. This is facilitated through mortgages from participating lenders and is accessible only through mortgage brokers. Both first-time buyers and those moving homes are eligible to take advantage of the Deposit Unlock scheme.

It’s also essential to consider the potential drawbacks as well. Such as future rate uncertainty and other costs. While the initial term offers enticing rates, there is no guarantee that mortgage rates will remain favourable once the fixed period concludes. Potentially leading to a substantial increase in monthly payments. What’s more, to access the lowest rates, homebuyers may need to have a substantial deposit. Often around 40% of the property’s value, which can be a significant financial hurdle for many.

There are also limited property options. As participation in the Own New Rate Reducer scheme is currently restricted to new-build properties from approved homebuilders. Potentially limiting the choices available to prospective buyers. It’s also worth bearing in mind the well-known reality that new-build homes often command a premium price tag compared to existing properties, and their value may depreciate more rapidly in the initial years.

So how does the ‘Own New Rate Reducer’ really stack up?

In the spell binding tapestry of UK home buying schemes. Each has its unique thread, and the ‘Own New Rate Reducer’ scheme is no exception. Unlike its cousins—the Mortgage Guarantee Scheme, First Homes Scheme, Shared Ownership, and Deposit Unlock Scheme. The ‘Own New Rate Reducer Scheme’ stands apart by not being combinable with these other options. While these schemes cater to a broad audience of first-time buyers and home movers, the ‘Own New Rate Reducer’ specifically targets those purchasing new builds with its tantalisingly low mortgage rates.

This exclusivity means that if you’re set on a shiny new build and want to benefit from the lowest interest rates imaginable, The ‘Own New Rate Reducer’ might just be your golden ticket. However, if you’re considering other types of properties or need the flexibility of combining support schemes. You might want to explore the other available options. Each scheme has its charm, but for the modern homebuyer looking at new builds, the ‘Own New Rate Reducer’ provides a compelling alternative with its unique (and rather magical) benefits.

Remember, it’s best to chat through your options with a mortgage advisor to get the tailored option, not guesswork. Especially with financial decisions. Weigh up both sides of the coin before you leap into your new home adventure like a rabbit into a top hat, so to speak…

Contact us:

mark@daviesdavies.co.uk – Sales Director (contact for sales, lettings and new homes)

katrina@daviesdavies.co.uk – Head of Property & Block Management (contact for property and block management)

Davies & Davies Estate Agents, 85 Stroud Green Road, London, N4 3EG

Article & images by Barefaced Studios

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