What is the Own New Rate Reducer scheme, and how does it work?

The Own New Rate Reducer scheme, which launched in February 2024, aims to make it cheaper for people to purchase a new build property.  

Property finance company Own New works with lenders and homebuilders to allow those hoping to get on the property ladder access to reduced mortgage rates.  

We’ll reveal everything you need to know about the Own New Rate Reducer scheme, including how it works and the pros and cons.  

What is the Own New Rate Reducer scheme? 

The Own New Rate Reducer scheme makes it cheaper to buy a new build home by helping homebuyers access mortgage rates that are much lower than traditional ones for an initial period.  

This scheme is open to first-time buyers and those planning to move. It could help them get on the property ladder, pay off more of the capital value of their mortgage and build up more equity in their home.  

Own New works with more than 150 homebuilders, including Barratt Homes, Bellway Homes and Taylor Wimpey.

Homebuilders often offer incentives such as cashback, stamp duty paid, furniture packages or a discount on the purchase price to encourage people to buy.

Through the Own New scheme, the budget for perks like this is invested into bringing down mortgage costs for buyers. Big lenders involved in this scheme include Virgin Money and Kensington.

How much will I pay with the Own New Rate Reducer Scheme?  

Interest rates are higher if you have a higher loan-to-value (LTV), which is the percentage of borrowing you have against your home. So, for example, with a 60% LTV mortgage, you own 40% of your home. 

Virgin Money is currently offering a two-year fixed-rate mortgage product starting from 0.59% for 60% LTV.

With these mortgage deals, you can make significant savings compared to applying for a mortgage on the open market. 

The average two-year fixed mortgage rate for homebuyers with a 40% deposit is 4.27% according to Rightmove (as of 21 February 2025).

If you have a £200,000 mortgage for 25 years at a rate of 4.27%, your monthly payments for the initial term would be £1,085.

This would fall to £717 per month if you had a 0.59% rate. Over two years, you’d save around £9,000 overall. 

However, it’s worth stressing not everyone can access this rock-bottom rate - you would need to pass affordability and credit checks and have a large deposit to put down.

Own New also offers the Deposit Drop scheme, where you can buy a new build home with a 5% deposit and access competitive mortgage rates.  

You will need to use a participating homebuilder, and there may be caps on the property value or maximum amount you can borrow. 

How does the Own New Rate Reducer scheme work? 

First, it’s important to stress that these are traditional mortgages – but you must access them via Own New. 

The property developer agrees to contribute 3% or 5% of the purchase price, which is sent to your mortgage lender via Own New. 

This is offset against the mortgage interest, so your rate falls in line with the housebuilder’s contribution, which results in lower monthly payments for your initial term.  

Once you find your dream new build property, you must arrange a mortgage via an approved Own New broker and then go through the usual new build buying process. 

Unbiased can connect you with a qualified mortgage broker, or you can search our directory. However, you should check with Own New to ensure they are approved for this scheme. 

Your mortgage broker can look at your circumstances to decide whether Own New’s Rate Reducer or Deposit Drop scheme is right for you, as you cannot use both.   

Who is eligible for the Own New Rate Reducer scheme? 

The only eligibility for the Own New Rate Reducer scheme is that you’re buying a new build property. 

So, this scheme is open to: 

• First-time buyers

• Home movers 

• Those who’ve previously owned property 

Which lenders are available via the Own New Rate Reducer scheme? 

This scheme launched with Halifax and Virgin Money, and has other lenders on board including Furness Building Society, Perenna and Kensington Mortgages.

What are the pros and cons of the Own New Rate Reducer scheme? 

It’s worth being aware of the advantages and disadvantages of this scheme before applying. 

The pros of the Own New Rate Reducer scheme 

• Lower monthly mortgage payments: You’ll benefit from lower monthly mortgage payments compared to a mortgage on the open market. These lower repayments could potentially save thousands of pounds over the initial term.

• Flexibility over lower rates or a small deposit: Own New offers two schemes that could make it cheaper to get on the property ladder – Rate Reducer and Deposit Drop. You can choose based on what’s best for your circumstances.

• You have to use an Own New-approved mortgage broker: Using a mortgage broker can make your homebuying journey much easier, as they can find the best deal for you and boost your chances of a successful application.

The cons of the Own New Rate Reducer scheme 

• You may face higher rates in the future: Mortgage rates are currently high, so if they don’t fall by the time your initial term ends, your monthly mortgage payments could significantly increase.

• The lowest rates require a bigger deposit: As mentioned, a 0.59% rate is available, but the catch is that you need a 40% deposit, which can be tens of thousands of pounds.

• Limited choices: Not only do you need to buy a new build, but you also must use a homebuilder approved by the scheme.

• New builds tend to be more expensive: It’s usually more costly to buy a new build than a home that’s already been lived in, and new builds depreciate in value.

What are the alternatives to the Own New Rate Reducer scheme? 

If you’re hoping to get on the property ladder or want help buying your next home, there are many schemes you may be able to benefit from.  

• Mortgage guarantee scheme: This UK government-run scheme, available until 30 June 2025, allows first-time buyers to apply for a mortgage with a 5% deposit.

• First Homes scheme: The scheme provides discounted homes to first-time buyers in England who otherwise wouldn’t be able to afford one.

• Shared ownership: Shared ownership schemes are run by housing associations and are often open to first-time buyers. They allow you to take out a mortgage on a portion of your home and pay rent on the remainder.

• Deposit Unlock scheme: This scheme allows home movers with an existing mortgage and first-time buyers to access 95% mortgages on new builds.

Can I buy my own home without a deposit? 

It is possible to buy your own home without a deposit with a 0% deposit mortgage, but there is a lot you should consider beforehand. 

Whether you’re buying your first home or planning to move to another property, expert advice is crucial. 

Unbiased can quickly connect you with a qualified mortgage broker who can help you find the best mortgage for your circumstances.