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What is Own New’s Rate Reducer?
It’s a special type of mortgage available on some new build properties.
The builder passes an incentive of up to 5% of the purchase price to the lender, who then passes it on to you in the form of a lower interest rate.
As a result, you benefit from lower monthly mortgage payments throughout the fixed rate period. Because your interest rate is lower than an equivalent ‘normal’ repayment mortgage, you’ll pay off more of the balance in those first few years, too.
Who is eligible?
Both first time buyers and home movers qualify for Own New. It is only available on new build properties.
Currently only a small number of lenders offer the Rate Reducer. You might find that you don’t meet their criteria. However, more lenders are expected to come on board in the future.
How does Own New’s Rate Reducer work?
Mortgage lenders recognise that builders often offer deals on new build properties. This typically comes in the form of cashback, a deposit boost, or in upgrades to things like flooring and kitchens.
Most lenders will happily accept builder incentives worth up to 5% of the purchase price.
The Rate Reducer is a new kind of incentive. It effectively part-pays your mortgage lender’s interest during the initial fixed rate period, meaning you can get a lower interest rate and reduced monthly payments.
It doesn’t mean your rate will drop by 5%, though. Instead, you should save the equivalent of 5% of the purchase price in interest payments during the initial period.
If the full value of the incentive isn’t passed on in reduced interest, you should get a cheque for the difference.
What happens at the end of the fixed rate period?
Once your initial fixed rate period ends, the Own New benefit stops too.
This is when you should consider a remortgage, as doing nothing will often mean you drop onto the lender’s standard variable rate, which is usually quite high in comparison to their other deals.
Your new mortgage payments may be higher than you have been used to.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Do you have a question?
Does it cost me anything extra?
No, the builder pays the incentive to Own New. Own New then charges a small fee, and works with mortgage lenders to offer reduced interest rates. It doesn’t cost you anything.
Is the mortgage with Own New?
No, the mortgage is with normal lenders. Own New is a special product offered by some banks and building societies.
How do I apply?
You need to use an Own New approved mortgage broker. We’re part of the scheme, so we’d be more than happy to help you.
How do I find properties on the scheme?
You can search the Own New website, which displays a map showing developments with Own New properties.
What deposit is needed?
At least 5% of the purchase price. More options may be available to you with a deposit of 10% or more. A deposit of more than 5% might be required depending on your circumstances.
You can’t use a 5% builder gifted deposit with the Own New scheme.
How can The Mortgage Store Chorley help with Own New?
We’re an Own New approved broker, so we’re qualified to give advice on this exciting new scheme.
We’ll chat with you to find out about your needs so we can determine if this is the right kind of mortgage for you. If it is, we’ll work with the builder and Own New to get you approved as quickly as possible.
Say goodbye to worries about buying a home – let us help you make it happen! Contact us today.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE