More people able to get dream home despite interest rates remaining at 5.25%
New ‘Own New’ Scheme will help first-time buyers, divorcees and self-employed people, amongst others.
House hunters who have struggled to get on the property ladder or have unexpectedly found themselves requiring a new home due to divorce or separation could benefit from a new ‘Own New’ scheme, to get their dream new-build home.
Lenders and housing developers are introducing the scheme to purchase a new build property at a mortgage interest rate from as little as 0.99% – and housing developers will also contribute 3% to 5% of the purchase fee to the lender by way of a product fee, to keep rates as low as possible.
It comes as the Bank of England base rate of interest remained at 5.25% – a 16-year high – for the fifth month in a row, with indications that this rate will not drop before June.
Paige Noble, a new build conveyancer and team leader at Jacksons Law Firm, based in Newcastle and Teesside, said the Own Rate Scheme, founded by Eliot Darcy through his own company Market Mortgage, would be welcomed by first time buyers and those looking to move up the housing ladder – especially as it follows on from the end of the Help to Buy scheme.
Since its removal in 2022 it has led to difficulties for some people looking to get on the property ladder.
“As a new build conveyancer, I think this is great to have access to such a scheme and will encourage more people to buy new build homes,” Paige said.
“New build homes developers already offer benefits such as new build warranties and the homes are cost efficient due to beneficial EPC energy ratings, which is particularly helpful in the current economic climate.
“Now, thanks to this scheme, even more people will find it more affordable than they first expected to buy a new-build home.”
Paige says people have struggled to get their dream home of late, due to high interest rates and she is hopeful that the “Own New” scheme will “really take off” to benefit anyone who qualifies.
She added: “There could be people that need to get out of their matrimonial home quickly too – and this will help, by giving them more options.
“It’s great to see people who have previously thought ‘I can’t afford that’ making their dream home a reality.”
The Own New scheme differs from any shared ownership scheme, as buyers have the advantage of owning 100% of their new home upon completion.
The scheme, which can be accessed for purchasing flats or houses, helps people to pay off more capital value of their mortgage and build up more equity in their new home.
Whilst it can’t be accessed by buy-to-let investors directly, it can be accessed by current homeowners looking to move into a new build and rent out their existing home.
Paige says: “The aim of the scheme, which launched in February, is to make it more affordable to purchase a new build property in the UK.
“Already, more than 60 developers, including Bellway Homes, Barratt Homes and Taylor Wimpey have agreed to take part in the scheme and at present, two lenders, Halifax and Virgin Money are taking part – and it is expected many more will join in the near future.”
The interest rates start at 0.99% for a two-year fixed rate mortgage, with a 60% loan-to-value.
As an example of the scheme compared to a traditional mortgage, purchasing a £200,000 property with a mortgage for 25 years at a rate of 4.65% would cost about £1,129 per month.
However, as an example with a 0.99% rate, monthly payments would be approximately £752, saving about £9,000 over the two-year fixed-rate period.
The lowest rate is not available to everyone, but Own New also offers a deposit drop scheme -currently only available in the North East and Yorkshire.
With this scheme, you can buy a new home with just a 5% deposit and still access the competitive mortgage rates.
This scheme focuses on your earning and will be accessed on this basis, so it benefits people who are self-employed or building their credit.
More information about the scheme is available at https://ownnew.co.uk/for-brokers/ and you can also contact Paige at Jacksons Law for all your new build conveyancing needs 01642 356546 or visit https://www.jacksons-law.com/profiles/paige-noble-paralegal-new-build-property/ for more information.
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