Editor's Pick

Halifax and Virgin Money team up with Own New for low new-build rates

Halifax and Virgin Money team up with Own New for low new-build rates
Christina Hoghton
Written By:
Christina Hoghton

Virgin Money and Halifax have partnered with Own New to offer reduced mortgage rates for new-build customers to make such purchases “more accessible and affordable”.

The lenders will offer cheaper mortgage rates for new-build customers with the Rate Reducer product, in conjunction with Own New, from 26th February.

What is the Rate Reducer mortgage?

Home builders sometimes offer incentives to buyers – often in the form of a cashback or reduction in price. Here, the incentive is used to lower monthly mortgage payments over a fixed term, which can boost affordability.

For some new-build buyers with high deposits or equity, rates below one per cent are available.

Gen H, Furness Building Society and Perenna have confirmed that they will be offering mortgages via the scheme.

By investing homebuilder incentive budgets into the mortgage upfront, usually up to five per cent of the property purchase price, initial repayments will be lowered for buyers.

Buyers can elect a two- and five-year fixed rate term, dependent on the lender’s criteria.

The customer can pay more off the capital value of their mortgage as the interest charged on the loan is lower.

Lenders will carry out normal affordability assessments, and independent financial advice should help.

For a new home worth £300,000, for instance, the two-year mortgage rate is 4.79 per cent with a £995 fee at 65 per cent loan to value (LTV) and will fall by 0.99 per cent at 60 per cent LTV with a £495 fee.

Product a ‘significant boost’ to new-build purchases

Eliot Darcy, founder of Own New, said its “ethos is to make homeownership open to more people, and we are confident that the launch of the Own New Rate Eeducer will achieve that”.

He said: “We, and the national lenders and housebuilders who have signed up to the scheme, believe that Rate Reducer will be a significant boost to many people’s homebuying dreams.

“By working together, we are increasing mortgage lending opportunities and bringing the possibility of owning a new-build home to a wider range of buyers. This is just the product to stimulate the housing market and give more people a helping hand to get onto the property ladder or to secure that new home that will give them the extra space they need.”

Craig Calder, head of secured lending at Virgin Money, added: “Buying a home is a major life event, and this first-of-its-kind mortgage product will help customers feel happier about their big purchase, knowing that they have the certainty of a lower fixed-interest rate over the initial period of the mortgage.

He added: “By using the homebuilder incentive budget to offset initial mortgage repayments, buyers can focus on other costs like furnishings and decoration to make their house a home.

“At Virgin Money, we’re continually looking at new and inventive ways in which we can assist borrowers, with the Rate Reducer following hot on the heels of our recent Fix and Switch product, which also provides certainty and flexibility.”

Amanda Bryden, head of Halifax Intermediaries, said: “We know that buying a new home is a big commitment for our customers, so we’re thrilled to be one of the first lenders to offer the Rate Reducer incentive through participating builders.

“This product gives customers more choice in the way they can benefit from builder incentives, and is especially helpful to those who want to see a lower initial mortgage payment as they get set up in their new home.

“Supporting homeownership remains a key priority for us, and the valued advice of mortgage brokers will help borrowers understand which is the right option for them to achieve their homeownership goals.”

Steve Mariner, sales and marketing director at Barratt Developments, said: “By launching the Own New Rate Reducer scheme, we are helping more people to be able to afford a home.

“The scheme gives buyers the financial boost they need to get them onto the property ladder. They will be able to compare all the options available to them to make sure they get a mortgage product that is right for them and in their long-term financial interests.”