Own New: Reduced rates and Deposit Drop
What is the Own New scheme? Own New- is a housing initiative designed to facilitate the purchase of new build homes. The main benefits are reduced mortgage borrowing rates (Rate Reducer) and the possibility to buy with just a 5% deposit (Deposit Drop). These advantages are made possible through co-operation with property developers and mortgage brokers. Let's understand what terms and conditions you can qualify for and what the benefits of each scheme are.
At this time, you cannot use two schemes at the same time. You will have to choose one of Own new. Rate Reducer or Deposit Drop.
What is Own New: Rate Reducer?
This concessionary payment scheme was introduced in 2024. It can be used to significantly decrease your mortgage tariff and monthly payments, whether you are a first-time buyer or already own a home. The project only applies to new build properties.
Key features of the Rate Reducer strategy:
- Who the programme is for: first-time homebuyers and buyers moving to a new place of residence.
- What properties are available: Over 60 property developers are involved. Including well-known ones such as Barratt Developments, Bellway and Taylor Wimpey.
- Lenders: Virgin Money and Halifax.
Starts at 0,99% for a two-year fixed-rate mortgage at 60% loan to value (LTV). Homebuilders invest in the buyer's pledge, bringing down interest fares. Clarify the terms and conditions for each property developer.
How Rate Reducer works
Here's how we can calculate the savings if we use the Rate Reducer programme for a £500,000 (the remaining amount after the deposit has been paid), 25-year mortgage with a standard bank rate of 4.65%.
Any debt calculator shows that with these parameters, the monthly cost of a £500,000 gage with an interest tariff of 4.65 percent over 25 years would be – £2,822.
With the reduced figure of 0.99%, the monthly payment for the same £500,000 bill over 2 years drops to approximately £1,880.
How much money we end up saving:
| Standard Monthly Payment | £2,822 |
| Reduced Rate Monthly Payment | £1,880 |
| Monthly Savings | £942 |
| Total Savings Over 2 Years | £22,608 |
This example illustrates the significant financial benefit of accessing lower mortgage rates through the Own New Rate Reducer scheme for a £500,000 mortgage. The scheme not only makes it more feasible to afford a new build home but also offers substantial savings on monthly payments, enhancing the buyer's ability to pay off more of the capital value of their mortgage early on.
P.S. Please note: the exact interest rate for you can be calculated for your specific property and mortgage terms. This is an example of the lowest interest rate. The average interest rate for most buyers is around 2,6%. Clarify your terms and conditions.
Pros and cons Rate Reducer
The advantages of the scheme are obvious:
- Lower monthly payments.
- The ability to choose between a lower charge or a smaller deposit.
- The necessity to use the services of a mortgage broker, which simplifies the process of buying a home.
- Advantages of new buildings. For example, technology in construction, noise insulation, environmental friendliness and furniture - all new and to modern standards! And the main thing is that no one has lived in it before you. (this is important 😉).
What are the disadvantages:
- Potential for tariffs to increase after the initial term ends (first 2-5 years).
- Lowest charges require a significant deposit (e.g. 40% deposit for a 0.99% rate).
- Can only be used for new-build purchases.
- The developer must be approved to operate this scheme.
- New builds can be more expensive compared to secondary market properties.
What is Own New: Deposit Drop?
The Own New Deposit Drop is a loan program that offers financial aid to homebuyers to help them cover the deposits required to acquire a new home. A condition of buying a home under this programme is a new build property worth up to £300,000.
Your deposit will be as low as 5% when you buy a flat with Deposit Drop.
This scheme allows customers to access low down payment loans at competitive interest rates. You own 100% of your flat. But you need to have a good credit history to qualify for this programme.
Steps to access the scheme:
The process is not too different from standard transactions. A third party is simply added to calculate the terms and approve the plan you want.
- Housing Search. Start by searching for a new home that suits your preferences and needs. You'll find absolutely every new build home in London in our catalogue. Additionally, you may simply use the map to search for properties near you.
- Contact. Once you have identified a potential home, contact us for more information.
- Mortgage Advisor. We will put you in touch with a home mortgage consultant who specialises in 'Owning New'.
- A counsellor will help you apply for a mortgage loan with special conditions.
New homes in London
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Frequently Asked Questions
FAQ
The Own New service is accessible to all individuals looking to buy a new construction home, encompassing both first-time purchasers and those moving from another home.
Own New collaborates with a wide range of construction companies nationwide, from large-scale national corporations to local regional enterprises.
Should your chosen builder be a participant in the program, they will guide you to a broker, allowing you to proceed with a mortgage application through the standard process.
The mortgage agreement is established directly with the lending institution. The goal of Own New is to expand the availability of both the Rate Reducer and Deposit Drop programs by partnering with additional lenders across the country soon.
Currently, merging the Rate Reducer with the Deposit Drop mortgage offerings is not an option.