It’s been encouraging to see some mortgage positives for new build home buyers as New Homes Week 2024 arrives. If you’ve been putting off a new build home purchase due to mortgage or deposit affordability, this will certainly come as welcome news!
From lifting maximum LTV to help with interest rates, find out more about the initiatives and who’s doing what.
Below 1% Mortgage Rates A new scheme started this week, on Monday 26th February, which will offer mortgages with rates potentially below 1% to those buying a new-build home. The lenders offering the mortgages for the scheme thus far include Virgin Money and Halifax, although a few more lenders have confirmed they will be coming on board with the scheme in due course.
The mortgage scheme, referred to as the Own New Rate Reducer, is being rolled out by a business known as Own New alongside housebuilder Barratt Developments. And whether you are a first-time buyer or an existing homeowner, as long as you’re buying a new-build home, it can help unlock lower mortgage rates and reduce monthly payments.
The Own New Rate Reducer Scheme
You might be wondering how the scheme will work. And why is a housebuilder spearheading this new initiative?
Well, it all works by using incentive budgets offered by the housebuilder. Own New Rate Reducer then directly offsets the incentive amount against the mortgage interest to reduce the monthly mortgage payments.
Barrat Developments outlines how the scheme works, as follows.
- They could contribute either 3% or 5% of the purchase price depending on the build stage of your chosen property.
- The housebuilder’s contributions goes directly to your mortgage lender via the third party Own New.
- In an example whereby, you get a 5% housebuilder incentive, based on mortgage rates available in the market, with a 2-year initial period and an LTV of 75%, you could reduce your mortgage interest rate by up to 3.19%.
- In the first 2-5 years of your mortgage, you could look at saving on your monthly mortgage payments.
Barratt Developments is the first housebuilder to launch this new Rate Reducer scheme, having worked alongside Own New to design it. There are more developers in support of it and who have signed up to take part. These include Bellway, Taylor Wimpey, Persimmon and Berkeley Homes.
The next steps to access the scheme
In the first instance, you should speak to one of the housebuilders we have mentioned here, to find a home that is available through the scheme. Make sure the home and its price is right for you and negotiate to get the best deal you can.
One you are happy; the housebuilder will then refer you to a specialist mortgage broker partner who will progress your application.
It’s important to note that you will still need to meet lender affordability tests as you normally would with any mortgage application. And bear in mind that once the deal finishes, your interest rates will likely be higher, and payments will increase.
Santander Lifting LTV to 95% for New Builds
Taking a different strategy to appeal to people looking to buy a new build home, Santander made a move to lift the maximum LVT on new build homes and apartments to 95% this week. The good news for buyers is that only a 5% deposit will be needed to buy a new-build property.
This is a significant change, when you consider the lender was formerly offering borrowing up to a maximum of 85% LTV for new-build houses and 80% LTV for new-build apartments.
The offer from Santander started Tuesday 27th February and coincides with New Homes Week, showing the lender’s support for the new-build home market. For customers looking to buy a new build with a 95% LTV mortgage, there will be a choice from Santander’s current 95% range of 5-year fixed-rate products.
Why these Financial Incentives matter
More needs to be done to make home ownership more affordable in this country. Not only is there a considerable shortage of homes but affordability is making it very difficult for younger households to get onto the property ladder.
And beyond first-time buyers, across the board, more needs to be done to get people buying new-build homes again. New builds are after all, a means to get more people to transition to greener living, with the properties being far more energy efficient than older ones. A collective effort towards tackling mortgage and house buying affordability is just the ticket to get more people buying new again. That’s the same for first-time buyers, downsizers or current homeowners looking to step up to a bigger, greener home.
Plus, with the Chancellor’s budget due next week, there is hope for more to come to help first-time buyers especially, to buy new-build homes. Watch this space!
There’s no better time to buy a new-build home than New Homes Week 2024! To get started buying a new home and to take advantage of one of the new mortgage offers available, then you first need to find the home you want to buy. And that’s where our handy search tool comes in. Simply type in your postcode or ideal location and we will deliver all the new homes available nearby, from a range of housebuilders large and small. Start your new home search here.
