Jamie Lennox - Mortgage Adviser - Dimora Marketing

Understanding the Own New mortgage scheme

Own New Mortgage scheme

Understanding the Own New Mortgage Scheme

Navigating the labyrinth of the UK mortgage market as a first-time buyer can feel like trying to find your way out of a hedge maze, blindfolded, on a rainy day. But what if I told you there’s a new scheme that’s rolled out the red carpet straight to the door of your new build dream home, with interest rates that make your bank account sing? Let’s dive into the Own New mortgage scheme, the golden ticket for first-time buyers and new-build aficionados. In this blog, we will be covering the good, the bad, and the ugly surrounding this route onto the housing ladder.

The Golden Key: Lower rates

With rates rising significantly over the last 24 months more first-time buyers will be considering ways to buy a property that is cost effective. Now picture this: mortgage rates that hark back to the record lows of Autumn 2021, are now within your grasp, provided you buy a new build (well from a select few developers). Thanks to the innovative Rate Reducer scheme by Own New, in collaboration with Halifax, Virgin Money, and Barratt Developments, that dream is now a pinch-me reality. Offering rates starting as low as 0.99%*, this scheme stands in stark contrast to the typical rates on the open market currently. It’s like finding a designer dress at high street prices – except it’s your mortgage.

owning a new home

How the Own New Mortgage scheme works: A Closer Look

The Own New scheme isn’t about slashing asking prices or covering your stamp duty (although those are lovely gestures). Instead, it’s about reducing your monthly mortgage repayments for a sweet two or five years. Imagine your mortgage as a chocolate cake, and this scheme is the cherry on top that makes it even more delectable. It directly offsets a portion of your mortgage interest with a housebuilder incentive, giving you lower monthly payments and more money to spend on turning your new house into a home.

The initial Catch? 

To snag the lowest rates, you’ll need a hefty deposit. For a £300,000 property, you’re looking at a 40% deposit for the market leading deal. It’s a high bar, but the rewards are sweet, saving you a tidy sum over two years and helping you carve a bigger slice of equity in your property.

The Masterminds and Their Castle-Building Allies

Barratt Developments has taken the lead, but the bandwagon is growing. Persimmon, Taylor Wimpey, Bellway, and Berkeley Homes are all on board, turning this scheme into one that will be more readily available across the country.

Lender onboard with the Own New mortgage scheme?

Halifax and Virgin Money are the pioneering lenders, with Gen H, Furness Building Society, and Perenna set to join the round table. They’re committed to ensuring you can handle the eventual step-up in rates post-incentive period, safeguarding your financial fortress. Depending on the success on the scheme we may see further high street lenders look to join the scheme in due course.

own new mortgage scheme

A Beacon of Hope or a Siren’s Song?

Opinions on the Own New mortgage scheme are as varied as British weather. Some hail it as a groundbreaking aid for buyers in these turbulent economic times, while others caution it might be a beautifully wrapped package with strings attached. It’s hailed for offering a financial breather, allowing buyers to focus on feathering their new nests. Yet, critics argue it’s a clever ploy to keep sales buoyant without lowering prices, urging buyers to tread carefully.

The Real Deal: Negotiating Power

While the Own New mortgage scheme offers undeniable perks, some argue that negotiating a direct discount on the asking price might yield more immediate benefits. After all, a pound saved today is a pound earned tomorrow.

Our verdict

Although the Own New mortgage scheme does on paper grab the headlines with the low rates it is certainly a decision that shouldn’t be taken lightly and therefore should seek independent advice on the long-term picture. The positive in our eyes is it will entice more first-time buyers onto the ladder, it creates a demand for new builds which will incentivise developers to keep building more homes to hopefully fill the shortfall of new homes coming available. However, this does come with some serious concerns where we see some people getting stung in the long run. These would include concerns about overpaying for the property in the first place.

With cheap money becoming available, it could push the prices of a new build higher. There is a real risk that at the end of the deal their next mortgage won’t be anywhere as cheap and could lead to a big sell-off on the housing estates leading to house prices falling once people reach the end of the fixed rates.

Our other concern is, initially only selected mortgage advisers will be able to offer the scheme (likely the ones that are already tied to the developer) due to their existing relationship with the developer will the advice around the suitability of the scheme be truly impartial or will their ties to the developer have an overriding influence. If in doubt speak to a separate mortgage broker to discuss it over with before committing.

In Summary: The Path to New Build Ownership

It offers hope for first-time buyers and those drawn to the allure of new builds, offering a rare opportunity to lock in low mortgage rates. As with any financial decision, the key is to do your homework, consult with experts, and consider your long-term goals. Whether it’s the right path for you or a stepping stone to other options, the Own New mortgage scheme is certainly shaking up the UK mortgage market and opening doors for aspiring homeowners.

With its innovative approach to reducing mortgage rates, it offers a glimmer of financial ease in the often daunting journey to homeownership. However, the wise will tread carefully, armed with knowledge and a clear understanding of their long-term financial landscape. After all, the journey to owning your dream home should be as informed and joyous as the destination itself.

*The rate quoted is the headline product rate, there may be associated fees involved with arranging this deal, and is correct as of 28th February 2024. All deals can be withdrawn at any time.

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