Virgin Money Collaborate with Own New

Virgin Money has made a significant stride in making homeownership more attainable and affordable for new build customers with its innovative Rate Reducer product, launched in collaboration with Own New, starting from Monday 26th February.

The essence of this initiative lies in the strategic investment of homebuilder incentive budgets into the mortgage upfront, which can typically amount to up to 5% of the property purchase price. By integrating these funds into the mortgage, initial repayments are significantly reduced, thereby easing the financial burden on buyers and making the dream of homeownership a reality for many.

For instance, let’s consider a new home valued at £300,000. Under the Rate Reducer product, an introductory two-year mortgage rate of 4.79% with a £995 fee at 65% Loan to Value (LTV) could be reduced to a mere 0.99% at 60% LTV with a reduced fee of £495.

This substantial reduction in mortgage rates during the initial period provides buyers with much-needed financial relief, allowing them to allocate resources towards other essential expenses associated with setting up their new homes.

The Own New Rate Reducer proposition extends a sense of security to new build customers by offering a reduced fixed rate over two or five years. Exclusively available through specialist new build intermediaries registered with Virgin Money, this offering initially targets selected developments by leading homebuilder Barratt Homes. Further lenders are also likely to be added to the initiative in the coming months.

The mechanics of the product rely on leveraging the completion incentive budget provided by the housebuilder to facilitate Virgin Money in providing a lower interest rate mortgage. This not only reduces the monthly repayments for the initial fixedrate period but also ensures that customers are gradually paying off more of the capital value of their homes.

Moreover, as the initiative expands its scope from 4th March onwards, prospective buyers will have access to the Rate Reducer product through a network of 60 participating housebuilders, including industry giants like Persimmon, Taylor Wimpey, Bellway, and Berkeley Homes. Upon selecting their desired property, applicants will be referred to specialised new build mortgage broker partners.

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-reducer 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, emphasised the significance of this initiative, stating, “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.”

By alleviating financial barriers and providing greater flexibility to buyers, this initiative paves the way for a more inclusive and accessible housing market, empowering individuals to embark on their journey towards homeownership with confidence and security