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Own New Scheme

Gary Clarke tells us all we need to know about the Own New Scheme.

The Own New Scheme is quite an exciting scheme. It’s specifically for new build properties – and one of the benefits with these properties is that the builder will often offer you an incentive to help with the purchase of the property.

Own New allows us to use that incentive at either 3% or 5% to negotiate a slightly cheaper interest rate from lenders who are part of the scheme. It means you could pay a little bit less for your mortgage over that first two or five-year period.

The best way to find out if the scheme is right for you is to speak to any mortgage advisors who, like us, are part of the scheme. It’s available for First Time Buyers and also Second Time Buyers who are moving house.

It’s also available if you want to retain an existing property in the background or if you’re buying a second residential property – as long as you meet the lender’s criteria for those specific circumstances. Because it’s an incentive applied to a new build property, it doesn’t discriminate against any particular type of purchaser.

As you might expect the answers do vary. The minimum deposit you would need is 5% and one lender in particular will allow a 5% deposit. A couple more lenders allow you to buy with a 10% deposit – so the absolute minimum is 5%.

In terms of how much you can borrow, it really depends on your circumstances. The affordability is the same as it would be for any other mortgage. It will be based on your income and your outgoings. The best way to find that out will be to speak to us, because the amount you can borrow will vary from person to person.

Whether you pay stamp duty is dependent on your circumstances and the purchase price of the property. When you speak to your mortgage advisor, you should ask them how much the stamp duty is going to be – they should be able to give you an idea.

There’s no additional cost to be aware of specifically for the Own New Scheme but typically you will need to pay for a solicitor, that stamp duty and also think about the cost of moving home. That could be hiring a van and popping all your stuff in the back, or hiring a firm to come and move it all for you.

Also, when you move in there may be costs for soft furnishings or additional furniture you’re going to need. There isn’t a specific figure we can put on that because it will change from person to person.

[podcast recorded in April 2024]

As of right now, we have four lenders currently offering mortgages within the Own New Scheme – Halifax, Virgin Money, Furness and Perenna.

Whilst these offer Own New mortgages, an important fact to consider is you must use an approved Own New mortgage advisor. You need to check that your chosen mortgage advisor can advise on that scheme.

In terms of the house builders taking part, there isn’t really a definitive list. It has quickly moved from 60 to 250 participating builders. Because it’s an incentive, obviously there’s a cost to the builder. So just because a builder is signed up, it doesn’t automatically mean they will offer it on a particular plot.

But by the same token, any plot could potentially have the incentive attached to it. It’s definitely worth asking a builder whether they’d be prepared to offer that incentive or not.

There’s no specific exclusion for creditworthiness. However, you will still need to pass a credit check with those lenders and any new lenders that join the scheme in future.

So whilst the technical answer is yes, you can apply, do bear in mind that if you have any adverse credit you’ll need to discuss that with your mortgage advisor. We can have a look at what those lenders are offering and whether you’re going to meet the requirements.

Remember, every lender scores slightly differently and will have their own tolerances. So it’s always best to discuss your individual circumstances. That applies to any mortgage, not just using the Own New Scheme.

When you come to the end of your deal you have the same options as anyone else. That’s typically to go to another lender if there’s a better deal available, or remain with your existing lender if it’s more feasible, or easier to do so.

Typically we’ll always recommend the cheapest option. But ultimately you can choose what you want to do. The fact that you used Own New in the initial purchase will have no impact on your ability to remortgage, or the types of remortgages available.

PLEASE NOTE – The Own New discount will not continue at the end of the initial fixed rate period of your mortgage.

The biggest positive to this scheme is getting lower monthly payments in that first two or five year period. It means that you’ve got more cash at hand during that difficult time when you move house. You haven’t got to worry about such high bills.

If there is a downside, it’s that typically lenders allow a maximum of up to 5% financial incentives towards a purchase. It varies from provider to provider. Once you’re using Own New it will take up either 3% or the whole 5% – so you may find that you don’t have access to other incentives on top of the scheme. But that’s really about it.

We’ll guide you on whether it’s going to be right for you and your circumstances. There really isn’t any right and wrong about how you use an incentive, but we would have a chat with you about your situation, your needs and preferences and we’ll work together to find the best way forward for you.

It might be Own New, or it might be something else. It’s about getting to know the person sitting in front of us and finding out all about them to find the best recommendations from there.

One of the most important parts of how we give advice is to keep an open mind. We look at all the options – we don’t just consider one particular path. The Own New Scheme is a brilliant scheme and we’re fully behind it, but we also recognise that it might not be for everybody.

We’ll only know that through conversation and discussion – not through what we read on Google or in the papers. Your mortgage adviser will always be your best friend and will always find the right path for you.

Your home may be repossessed if you do not keep up with your mortgage repayments.

Own New Summary

What is Own New rate reducer?

Own New Rate Reducer is a new, controlled way to apply a home builder incentive.
The incentive effectively part-pays the lender’s interest for the initial term, meaning a cheaper mortgage is delivered to the borrower.
The borrower gets a standard mortgage from the lender, just cheaper.
One New Rate Reducer is only available through specialist panel mortgage brokers
Own New offers a better way for people to buy a new home if they have a lower deposit or want a lower interest rate. It is designed to make home ownership available to many more people.
Subject to each lender’s criteria, Own New is available on flats, apartments and houses, low and high-value properties and there are no regional price caps. It is available for people buying their first home and those moving up the property ladder.
The scheme is fully privately funded, with no support from the taxpayer.

Benefits of the Scheme

  • The scheme will allow customers to benefit from lower monthly payments in the first 2 or 5 years.
  • Customers should take advice from a registered New Homes Mortgage Adviser so they can understand the options available to them, only New Build Advisors registered with the scheme can give advice and make applications for the relevant products.
  • Taking advantage of a lower interest rate means more of the monthly payment goes towards reducing their mortgage, so they will owe less at the end of the fixed term.
  • Affordability and eligibility for the product will need to meet lenders standard criteria.

Is there anything I need to be aware of?

  • The scheme is available via a restricted number of lenders.
  • The initial incentive that is applied to the 2 year or 5 year fixed rate mortgage will not continue after this initial fixed rate period where your mortgage will be reviewed in the same way as if you had not been on the scheme.

Who is it for?

  • The scheme is not just for First Time Buyers – Home-movers can also use the scheme.
  • The scheme must be used in line with each builder’s incentive policy, which means consideration needs to be taken if the customer is wanting to use assisted-selling, Part Exchange, or even if other incentives.
  • The scheme will be available for builders registered with the scheme.