Own New: Reduced Mortgage Rates and 5% Deposit Drop
Own New is a developer-backed initiative designed to make buying a brand-new home simpler and more affordable. By working in partnership with property developers, mortgage brokers, and major lenders, the scheme offers two distinct pathways to homeownership: Rate Reducer and Deposit Drop.
Launched in early 2024, Own New has rapidly expanded to include over 60 developers across the country. Unlike Help to Buy, which closed in 2023, the Own New scheme is open to both first-time buyers and existing homeowners moving up the property ladder.
Please note that you cannot combine the two schemes. When buying a property, you must choose either the Rate Reducer or the Deposit Drop.
What is Own New: Rate Reducer?
The Rate Reducer scheme helps you secure significantly lower mortgage interest rates during the initial fixed period (usually two or five years). The scheme only applies to new build properties.
How Rate Reducer Works
When you purchase a qualifying home, the developer invests a financial contribution (typically 3% to 5% of the property's purchase price) directly into your mortgage lender. The lender uses this lump sum to offset your interest payments, lowering your monthly mortgage bill.
For example, fixed-rate mortgages can start as low as 0.99% for a two-year term at a 60% loan-to-value (LTV) ratio. While the lowest rates require a larger deposit, the average rate for most buyers using the scheme is around 2.6%, which is still significantly below standard market rates.
Example Savings Calculation
Here is an example of the potential monthly and cumulative savings on a £500,000 mortgage (the amount borrowed after paying your deposit) over a 25-year term:
| Mortgage Option | Interest Rate | Monthly Payment |
|---|---|---|
| Standard Market Mortgage | 5.0% | £2,923 |
| Own New Rate Reducer | 0.99% | £1,880 |
| Monthly Savings | £1,043 | |
| Total Savings Over 2 Years | £25,032 |
This substantial monthly saving helps you manage your living costs during your first few years in a new home, allowing you to pay off more of the mortgage principal early.
Pros and Cons of Rate Reducer
Advantages:
- Significantly lower monthly mortgage payments.
- Available to both first-time buyers and home movers.
- Simplifies the purchase process by using approved, specialised mortgage brokers.
- Provides all the benefits of buying a brand-new home, including high energy efficiency, modern appliances, and structural warranties.
Disadvantages:
- Mortgage rates will revert to standard lender rates after the initial two-year or five-year fixed term ends.
- Accessing the lowest rates (such as 0.99%) requires a large deposit of up to 40%.
- Only available on new build properties from participating developers.
What is Own New: Deposit Drop?
The Deposit Drop scheme helps first-time buyers and home movers purchase a new build property with just a 5% deposit. Unlike other schemes where you only buy a fraction of the property, Deposit Drop allows you to own 100% of your home from day one.
You secure a standard 95% LTV mortgage through a participating lender. Because the scheme is backed by developer contributions, you can access competitive interest rates that are typically reserved for buyers with larger deposits.
To qualify for the Deposit Drop, you must purchase a brand-new home from an approved developer, have a clean credit history, and meet the lender's standard affordability criteria.
Steps to Buy a Home with Own New
The process of buying a home using the scheme is straightforward:
- Find a participating home: Browse active London new builds and filter for developments offering Own New. You can search for modern flats in London or look for off-plan properties to reserve a unit before construction is finished.
- Contact the developer: Once you find a suitable home, reach out to the property developers running the site to confirm the property qualifies for the scheme.
- Speak to a broker: The developer will put you in touch with an approved, specialised mortgage broker who will calculate your exact rates and help you apply.
- Complete your purchase: Your broker will secure your mortgage, and your solicitor will handle the legal paperwork.
Comparing Other Affordable Buying Schemes
If Own New does not fit your financial situation, you should explore other popular buying schemes in London:
- Shared Ownership: A part-buy, part-rent scheme that lets you purchase a share of a home (from 10% to 75%) and pay rent on the remaining portion, significantly lowering deposit requirements.
- First Homes Scheme: A government initiative providing new build homes to local first-time buyers and key workers at a discount of 30% to 50%.
- Help to Buy: Although the original equity loan scheme ended in 2023, you can read our guide to understand its current closure rules and past impacts.
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Frequently Asked Questions
FAQ
Own New is a developer-backed initiative that helps buyers secure lower mortgage rates (Rate Reducer) or purchase a new build home with a 5% deposit (Deposit Drop).
The scheme is open to both first-time buyers and existing homeowners moving to a new build property. You must have a clean credit history and use an approved specialized broker.
No, you cannot combine the two schemes. You must choose either the Rate Reducer to lower your interest rate, or the Deposit Drop to buy with a 5% deposit.
Over 60 major homebuilders (such as Barratt, Taylor Wimpey, and Bellway) and leading mortgage lenders (including Halifax and Virgin Money) participate in the scheme.
The property developer pays a financial contribution (usually 3% to 5% of the purchase price) directly to the mortgage lender. The lender uses this money to reduce your interest payments during the initial fixed period (usually 2 or 5 years).