The product offers reduced rates on new build properties
Virgin Money has introduced a new mortgage product, developed in collaboration with Own New, aimed at making the purchase of new build homes more accessible and affordable for buyers.
The Rate Reducer product, available from today, February 26, offers reduced mortgage rates for customers purchasing new build properties.
This initiative allows for a portion of the homebuilder’s incentive budget, typically up to 5% of the purchase price, to be applied upfront to the mortgage. This results in lower initial repayments for buyers, enhancing the affordability of homeownership.
The Rate Reducer product can offer new-build customers a reduced fixed rate over two or five years. Initially, it will be accessible exclusively through specialist new build intermediaries registered with Virgin Money, starting with select developments by Barratt Homes.
Utilising the completion incentive budget from housebuilders, the product enables Virgin Money to offer a lower interest rate mortgage. This arrangement not only reduces monthly repayments during the fixed rate period but also ensures that customers are paying off more of the capital value of their home. A deposit is generally required by most homebuilders to secure the new home.
From March 4, the scope of the Own New Rate Reducer will expand, allowing customers to choose from new homes built by any of the 60 housebuilders participating in the scheme. The list includes major developers such as Persimmon, Taylor Wimpey, Bellway, and Berkeley Homes. Customers interested in the product will be referred to a network of specialist new build mortgage broker partners.
“Our ethos is to make home ownership open to more people,” said Eliot Darcy, founder of Own New. “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.”
“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,” said Craig Calder, head of secured lending at Virgin Money.
“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.”
Virgin Money will apply its usual affordability criteria, based on the full mortgage reversion rate, to ensure buyers can sustain repayments once the fixed-term benefit concludes.
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