Virgin Money will offer reduced mortgage rates for new-build customers, teaming up with Own New as a launch partner for its innovative ‘Rate Reducer’ product, available from Monday 26 February.
By investing homebuilder incentive budgets into the mortgage upfront, typically up to 5% of the property purchase price, initial repayments will be reduced for buyers - making home ownership more accessible and affordable.
For a new home worth £300,000, for example, the introductory two-year mortgage rate of 4.79% with a £995 fee at 65% LTV will be cut to 0.99% at 60% LTV with a £495 fee.
The unique proposition of the Own New Rate Reducer offers new build customers the security of a reduced fixed rate over 2 or 5 years and is available exclusively via specialist new build intermediaries registered with Virgin Money – initially for selected developments by leading homebuilder Barratt Homes.
The product uses the completion incentive budget offered by the housebuilder to enable Virgin Money to provide a lower interest rate mortgage, reducing the monthly repayments for the initial fixed rate period, while ensuring the customer is paying off more of the capital value of their home. Most homebuilders will also require customers to pay a deposit in advance to secure their new home.
To access the Own New Rate Reducer as it expands in scope from 4 March, customers will be able to select their new home from one of the 60 housebuilders taking part in the scheme, including Persimmon, Taylor Wimpey, Bellway and Berkeley Homes. Applicants will then be referred to one of a network of specialist new build mortgage broker partners.
Eliot Darcy, founder of Own New, said: “Our ethos is to make home ownership open to more people and we are confident that the launch of the Own New Rate Reducer will achieve that. 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 home buying 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, said: “We’re delighted to be a founding lender of the innovative Own New Rate Reducer, making it easier and more accessible for customers to afford a new-build home. 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 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.”
Usual Virgin Money affordability criteria will apply, at the full mortgage reversion rate, to ensure the purchaser can afford repayments once the fixed-term benefit ends.
The Rate Reducer follows on from the launch of Virgin Money’s brand-new Fix and Switch product which allows customers the security and certainty of an interest rate fixed for five years, but with the flexibility of being able to switch to another product with no early repayment charge after just two years.
Further details of Own New Rate Reducer are available at Virgin Money for Intermediaries or through a Virgin Money Business Development Manager.