Own New

What is Own New?

Own New provides a collaboration between home builders and lenders to make new-builds more financially accessible to buyers. Under the scheme, buyers can either benefit from lower interest rates for a fixed term or pay a low deposit of 5%. Home builders pay a fee to Own New based on which of these incentives they wish to offer prospective buyers. This fee is passed on to participating mortgage lenders. In return, lenders either offer a reduced mortgage rate to buyers or the option to pay a low deposit.

Aiming to make new-builds more affordable for buyers, the scheme not only offers a choice of mortgage products but is flexible in its use. It applies to houses and flats and is available to anyone who wants to buy a new-build home, including first-time buyers and home movers. You can apply whether you’re employed or self-employed. Your ownership of the property won’t be affected by taking advantage of one of the incentives — you simply apply for a standard mortgage while benefiting from a more affordable arrangement and own 100% of your new home.

The two incentives offered by Own New are Rate Reducer and Deposit Drop. One tackles the affordability issue of monthly mortgage repayments and the other helps overcome the hurdle of having a huge upfront expense to pay. We’ll explain both of these mortgage solutions below.

Own New Rate Reducer

One of the things that may be holding you back from applying for a mortgage is the high interest rates payable. Launched in February 2024, Own New’s Rate Reducer scheme offers a solution to this in the form of significantly reduced rates for an initial fixed term. This term can be either 2 or 5 years. Rate reductions of up to 4% are available with some mortgage rates below 1% being offered by lenders. The rate that you’re offered will depend on the lender, your circumstances and the new-build property you’re buying.

As the lower rates mean that your monthly payments will be lower during the initial term, this will free up some of your money that would otherwise go towards your mortgage payments. This will enable you to pay for other expenses that come with buying a new property, such as buying furniture and decorating your new home, reducing your financial pressure. With Rate Reducer, you also pay off more of the mortgage capital as the interest rate charged is lower. This means that you’ll have built up more equity at the end of the fixed term than you would have with a mortgage outside of the scheme.

How does Rate Reducer work?

The home builder offers an incentive of either 3% or 5% of the property purchase price. This is to encourage you to buy their new-build property, just like other incentives home builders offer, such as covering your stamp duty costs or upgrading the fixtures and fittings. Own New pays this amount to the mortgage lender and it is offset against the interest during the 2 or 5-year term. As such, you benefit from a much lower rate than would normally be available outside of this scheme and have lower monthly payments for the first 2 or 5 years of your mortgage.

As with most mortgage products, the more deposit you can pay, the better the rate you’ll be offered. For example, participating lenders offer a 0.99% interest rate at a 60% loan-to-value (LTV) ratio for a 2-year fixed term. This means that to take advantage of this low rate, you need a 40% deposit.

Own New Deposit Drop

It’s not always feasible to save an adequate deposit to buy a property as a first-time buyer or to wait until you’ve built up enough equity in your current property so that you can move home or buy a second property. With Deposit Drop, you can buy a new-build property with a low deposit of just 5%. You’ll also have access to competitive rates for your mortgage.

How does Deposit Drop work?

Deposit Drop was introduced by Own New in 2023 for new-build properties in the North East and Yorkshire. This scheme will gradually expand to other areas. To offer this incentive, home builders pay a fee to Own New. This fee is passed to the lender and it reduces their level of risk. In return, the lender agrees to offer a low-deposit mortgage at a competitive rate. Some home builders cap the price of a new-build property purchased using Deposit Drop, such as a maximum of £300,000.

Just like buying a property using the Rate Reducer scheme, you need to apply for a standard mortgage via a participating lender for Own New’s Deposit Drop. You only need to pay a 5% deposit and pass the lender’s affordability checks. You’ll be offered a competitive mortgage rate and, once your purchase has completed, will own 100% of your home.

Are you eligible for Own New?

Own New is available for anyone buying a new-build property. As a first-time buyer, it gives you a chance to get on the property ladder with a newly built home. As a home mover or someone looking to buy a second property, you don’t need to wait until you have significant equity in your current home to be able to buy a new build.

You still have to pass the lender’s affordability checks, just as you would for any other mortgage application. The lower interest rate or deposit amount makes it easier to pass these checks. This is particularly beneficial if your circumstances have made it difficult to be accepted for a mortgage. For example, you may be self-employed and have an irregular income, you may be building your credit rating, you may previously have been furloughed or you may be paying off a large expense that’s hampering your finances right now but will be repaid within a couple of years.

Although you’ll benefit from a low initial interest rate if you opt for Rate Reducer, you need to remember that it could increase significantly when the fixed term ends, depending on the rates available at that time. As such, you need to be sure that you can afford an increased rate when the fixed term ends.

How to apply to Own New

Buying a new-build home through an Own New scheme is straightforward and you apply using the following steps:

• Find an eligible new-build property you want to buy through a participating home builder.
• Receive a Letter of Acknowledgement from the home builder. This needs to be provided to the lender to confirm the agreed incentive.
• Arrange your mortgage via an approved mortgage broker for the Own New scheme. The broker will discuss your options to help you decide which incentive – Rate Reducer or Deposit Drop – is the best one for your circumstances.
• Once the buying process has been completed, you’ll own 100% of your new-build home.

The advantages of Own New

Own New’s innovative mortgage solutions offer numerous advantages:

• The schemes make buying a new-build property affordable when your financial circumstances may otherwise put one out of your reach.
• You can choose between paying a 5% deposit and having reduced rates for a fixed term. The rates offered are lower than those available on the open market. The latter option means you’ll benefit from making lower monthly payments for the initial fixed term.
• You can benefit from an incentive whether you’re employed or self-employed.
• The Own New schemes apply to houses and flats.
• You own 100% of your home.
• With Deposit Drop, you don’t need to have saved a large deposit to get on the property ladder or have equity in an existing property before you can move.
• With Rate Reducer, the lower interest rate makes it easier to pass the lender’s affordability checks. This helps if your circumstances mean you would otherwise struggle to secure a mortgage. For example, if you’re self-employed, are still paying off a big expense, such as a car or wedding, or are building your credit rating.
• You pay off more of the capital with Rate Reducer as a lower interest rate is charged on the loan. As a result, you’ll have more equity in the property when the fixed term ends.

The disadvantages of Own New

There are also some disadvantages to consider before making a decision:

• Once the initial fixed term of 2 or 5 years has ended for your reduced rate, you may potentially face a significant increase, depending on the rates available at that time. As such, you need to plan ahead to ensure that you can afford the increased monthly payments.
• New builds are sold at a premium price and can decrease in value within the first few years. Although the home builder pays 3% or 5% of the purchase price under the Rate Reducer scheme, this is without negotiating on the price. Consider negotiating first to see if the home builder is willing to reduce the price. If they agree, you can then decide whether the lower purchase price or the Rate Reducer incentive on the full price is best for you.
• You need a bigger deposit to benefit from the lowest interest rates with Rate Reducer. For example, you need a 40% deposit to have an interest rate of 0.99%.
• The choice of new-build properties is limited as the home builder needs to be registered with Own New. As well as that, some home builders only offer the incentive for selected plots.

Alternatives to Own New

There are other options to consider if you’re not sure that Own New’s schemes are right for you. These include First Homes, Deposit Unlock, shared ownership and the 95% mortgage guarantee scheme.

First Homes

The First Homes scheme helps first-time buyers get on the property ladder by providing at least a 30% discount on the price of new-build properties. Available in England, this applies to a property price cap of £250,000 after the discount, or £420,000 after the discount if buying a property in London. To take advantage of this scheme, you need to pay a 5% deposit and take out a mortgage for at least 50% of the discounted price.

Deposit Unlock

Whether you’re a first-time buyer or an existing homeowner, Deposit Unlock enables you to buy a new-build home with a 5% deposit. This low-deposit scheme applies to new-build properties available from participating home builders. You need to arrange a 95% mortgage through a participating lender, with the maximum borrowing cap set at £750,000, depending on your lender’s terms.

Shared ownership

Shared ownership is a way to help you get a foot on the property ladder when you don’t have a large deposit. It offers a compromise between buying and renting so that you buy a portion of the property – usually between 25% and 75% – and pay rent for the remaining portion. The rent is paid at a discounted rate, which is usually 15–20% lower than the market rate. To buy your share of the property, you pay a deposit, which is typically 5–15% of your share’s value. As your mortgage is based on the share you’re buying, it’s much easier to pass the lender’s affordability checks.

Whilst shared ownership typically focuses on first-time buyers, you can also benefit if you already have a shared ownership home and want to move or you’ve previously owned a home but are no longer in a position to buy one.

95% mortgage guarantee scheme

This government-backed scheme has been extended until the end of June 2025. Open to first-time buyers and existing homeowners, it allows you to buy a home up to a value of £600,000 with a 5% deposit. You need to arrange a 95% repayment mortgage that has a fixed rate.

Discuss your new build mortgage options with our expert brokers

Buying a new-build property is appealing as it is brand new with no need to worry about any maintenance or repairs as soon as you move in. It offers a blank canvas that’s ready for you to put your stamp on. As well as that, it’s energy-efficient, which will help you to save on energy bills in the future. However, new builds are usually more expensive to buy than older properties and this can push them out of your affordability range. Using a scheme like Own New’s Rate Reducer or Deposit Drop, you have a better chance of securing a mortgage.

To discuss Own New or alternative schemes that can help you to buy a new build, just give us a call on 01322 907 000. Our mortgage brokers can discuss your financial situation and mortgage needs to determine the best course of action for you. Whether you’re a first-time buyer, a home mover or looking to buy a second property, we can find the ideal mortgage solution for you. If your circumstances are complex – for example, you’re self-employed or a contractor or you have a bad credit rating, we deal with lenders offering more flexibility in their criteria to help you secure a mortgage.

As well as arranging your new build mortgage, we can put financial protection in place for your newly built property. Our mortgage and protection brokers – based throughout Kent, London and Edinburgh – can help you decide on the right level of cover needed before arranging your new build home insurance. For more information, either give us a call on 01322 907 000, send an email to us at info@trinityfinance.co.uk or submit an enquiry via our contact form. We will reply to you as quickly as possible to assist with your new-build property needs.