Virgin Money has just unveiled a new mortgage product in partnership with Own New, designed to make the dream of owning a new build home more achievable for many. Dubbed the “Rate Reducer,” this new offering is set to revolutionise how prospective homeowners can afford their future homes.
Making New Homes More Affordable
As of February 26, the Rate Reducer mortgage product is available to buyers interested in purchasing new build properties. What makes this mortgage option stand out is its ability to make homeownership significantly more affordable from the get-go.
The magic behind the Rate Reducer lies in its innovative use of the homebuilder’s incentive budget, which can be as much as 5% of the property’s purchase price. This amount is applied directly to the mortgage upfront, effectively lowering the initial repayments for the homeowner. This means buyers can enjoy the benefits of lower monthly costs right when they need it most.
Flexible Options for Buyers
Virgin Money’s Rate Reducer product isn’t a one-size-fits-all; it offers flexibility with reduced fixed rates over two or five years. Initially, access to this product is through specialist new build intermediaries affiliated with Virgin Money and is available for select developments by Barratt Homes.
By March 4, the product will broaden its horizon, opening up to new homes constructed by any of the 60 participating housebuilders, including giants like Persimmon, Taylor Wimpey, Bellway, and Berkeley Homes. This expansion means a wider selection for potential buyers, who will be guided by a network of specialist new build mortgage brokers.
A Collaborative Effort to Enhance Homeownership
The collaboration between Virgin Money, Own New, and numerous national lenders and housebuilders is a testament to their commitment to making homeownership more accessible. Eliot Darcy, the founder of Own New, expressed optimism about the Rate Reducer’s potential to fulfill home buying dreams for many. This initiative is seen as a significant boost, increasing lending opportunities and making new-build homes attainable for a broader audience.
Craig Calder, head of secured lending at Virgin Money, echoed these sentiments, saying, “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.”
Ensuring Long-term Affordability
Virgin Money emphasises the importance of sustainability in homeownership. To this end, they apply their standard affordability criteria to the Rate Reducer mortgage, ensuring that buyers can maintain their repayments even after the fixed-rate benefit period ends. This approach underlines Virgin Money’s commitment to responsible lending and supporting buyers throughout their homeownership journey.