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What is the Own New Rate Reducer scheme, and how does it work?

The Own New Rate Reducer scheme, which recently launched in February 2024, aims to make it cheaper for people to purchase a new build property.  

Property finance company Own New works with lenders and homebuilders to allow those hoping to get on the property ladder access to reduced mortgage rates. 

Summary 

  • The Own New Rate Reducer scheme makes it cheaper to buy a new build home. 

  • You may be able to access significantly cheaper rates for your initial mortgage term. 

  • However, there are many pros and cons to consider. 

  • Unbiased can connect you to a qualified mortgage broker, although it’s worth checking with Own New to ensure they are approved.  

We’ll reveal everything you need to know about the Own New Rate Reducer scheme, including how it works and the pros and cons.  

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What is the Own New Rate Reducer scheme? 

The Own New Rate Reducer scheme makes it cheaper to buy a new build home by helping homebuyers access mortgage rates that are much lower than traditional ones for the initial period.  

This scheme is open to first-time buyers and those planning to move. It helps them pay off more of the capital value of their mortgage and build up more equity in their home.  

Own New work with over 60 homebuilders, including Barratt Developments, Bellway and Taylor Wimpey.  

Homebuilders often offer incentives such as cashback or a discount to encourage people to buy, but through the Own New scheme, they invest this into your mortgage, lowering your interest rate. 

Big lenders already involved in this scheme include Virgin Money and Halifax, with more lenders expected to join.  

How much will I pay with the Own New Rate Reducer Scheme?  

Rates start at 0.99% for a two-year fixed-rate mortgage with a 60% loan to value (LTV). 

The interest rates are higher if you have a higher LTV, which is the percentage of borrowing you have against your home. So, for example, with a 60% LTV mortgage, you own 40% of your home. 

However, you can save significantly compared to applying for a mortgage on the open market. 

The average two-year fixed mortgage rate for homebuyers with a 40% deposit is 4.65%, according to Rightmove.  

If you have a £200,000 mortgage for 25 years at a rate of 4.65%, your monthly payments for the initial term would be £1,129. 

This would fall to £752 per month if you had a 0.99% rate. Over two years, you’ll save around £9,000 overall. 

However, it’s worth stressing not everyone can access this rock-bottom rate.  

Own New also offers the Deposit Drop scheme, currently available in the North East and Yorkshire, where you can buy a new build home with a 5% deposit and access competitive mortgage rates.  

There are plans to expand the Deposit Drop scheme this year, but you need to use a participating homebuilder, and there may be caps on the property value or maximum amount you can borrow. 

How does the Own New Rate Reducer scheme work? 

First, it’s important to stress that these are traditional mortgages – but you must access them via Own New. 

The property developer will agree to contribute 3% or 5% of the purchase price, which is sent to your mortgage lender via Own New. 

This is offset against the mortgage interest, so your rate falls in line with the housebuilder’s contribution, which results in lower monthly payments for your initial term.  

Once you find your dream new build, you must arrange a mortgage via an approved Own New broker and then go through the usual new build buying process. 

Unbiased can connect you with a qualified mortgage broker, or you can search our directory. However, you should check with Own New to ensure they are approved for this scheme. 

Your mortgage broker can look at your circumstances to decide whether Own New’s Rate Reducer or Deposit Drop scheme is right for you, as you cannot use both.  

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Who is eligible for the Own New Rate Reducer scheme? 

The only eligibility for the Own New Rate Reducer scheme is that you’re buying a new build property. 

So, this scheme is open to: 

  • First-time buyers 

  • Home movers 

  • Those who’ve previously owned property 

Which lenders are available via the Own New Rate Reducer scheme? 

This scheme launched with Halifax and Virgin Money, with more lenders expected to join soon, including Furness Building Society, Perenna and Gen H. 

What are the pros and cons of the Own New Rate Reducer scheme? 

It’s worth being aware of the advantages and disadvantages of this scheme before applying. 

The pros of the Own New Rate Reducer scheme 
  • Lower monthly mortgage payments: You’ll benefit from lower monthly mortgage payments compared to a mortgage on the open market. These lower repayments could potentially save thousands of pounds over the initial term. 

  • Flexibility over lower rates or a small deposit: Own New offers two schemes that could make it cheaper to get on the property ladder – Rate Reducer and Deposit Drop. You can choose based on what’s best for your circumstances. 

  • You have to use a mortgage broker: Using a mortgage broker can make your homebuying journey much easier, as they can find the best deal for you and boost your chances of a successful application.  

The cons of the Own New Rate Reducer scheme 
  • You may face higher rates in the future: Mortgage rates are currently high, so if they don’t fall by the time your initial term ends, your monthly mortgage payments could significantly increase. 

  • The lowest rates require a bigger deposit: As mentioned, a 0.99% rate is available, but the catch is that you need a 40% deposit, which can be tens of thousands of pounds.  

  • Limited choices: Not only do you need to buy a new build, but you also must use a homebuilder approved by the scheme. 

  • New builds tend to be more expensive: It’s usually more costly to buy a new build than a home that’s already been lived in, and new builds depreciate in value. 

What are the alternatives to the Own New Rate Reducer scheme? 

If you’re hoping to get on the property ladder or want help buying your next home, there are many schemes you may be able to benefit from.  

  • Mortgage guarantee scheme: This UK government-run scheme, available until the end of June 2025, allows first-time buyers to apply for a mortgage with a 5% deposit. 

  • First Homes scheme: The scheme provides discounted homes to first-time buyers in England who otherwise wouldn’t be able to afford one. 

  • Shared ownership: Shared ownership schemes are run by housing associations and are often open to first-time buyers. They allow you to take out a mortgage on a portion of your home and pay rent on the remainder. 

  • Deposit Unlock scheme: This scheme allows home movers with an existing mortgage and first-time buyers to access 95% mortgages on new builds.   

Can I buy my own home without a deposit? 

It is possible to buy your own home without a deposit with a 0% deposit mortgage, but there is a lot you should consider beforehand. 

Whether you’re buying your first home or planning to move to another property, expert advice is crucial. 

Unbiased can quickly connect you with a qualified mortgage broker who can help you find the best mortgage for your circumstances. 

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About the author
Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.