It aims to help borrowers lower their monthly repayments on new build homes
Darlington Building Society has launched a new rate reducer mortgage in partnership with Own New, aimed at making homeownership more affordable for first-time buyers and home movers purchasing new build properties.
The Rate Reducer mortgage allows buyers to benefit from housebuilders’ incentives, which typically offer up to 5% of a property’s value as cashback or a deposit contribution. Instead of receiving this as a direct incentive, the funds are applied to reduce the mortgage interest rate during the fixed rate period, resulting in lower monthly repayments.
Key features of the mortgage include eligibility for skilled workers on visas with up to 90% loan-to-value (LTV), a 95% LTV option for new builds, and flexible affordability criteria that considers non-guaranteed income such as overtime and bonuses. The product is available across the UK and accommodates borrowers with minor credit issues or those using family-gifted deposits.
With concerns over affordability, particularly around monthly repayments, Darlington’s Rate Reducer mortgage offers a potential solution for those looking to purchase energy-efficient new homes. According to a June 2024 Property Tracker survey, 68% of people cited affordability as a key barrier to homeownership.
Louise Thorpe (pictured left), chief customer officer at Darlington Building Society, highlighted the product’s focus on addressing the affordability challenges in the housing market.
“Darlington’s Own New Rate Reducer mortgage is designed to help first-time buyers and home movers manage lower repayments during the initial mortgage term,” she said. “By working closely with our broker partners, we have adapted our affordability criteria to meet market needs, making homeownership more accessible.”
Own New founder Eliot Darcy (pictured right) said the partnership would help more buyers navigate today’s challenging market.
“We are excited to partner with Darlington to offer the Rate Reducer to new build customers nationwide,” Darcy said. “By reducing monthly repayments, we are making homeownership more achievable, especially for skilled workers and buyers with complex financial situations.”
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