A Worcestershire homebuilder has launched a mortgage scheme with Own New aimed at offering lower rates for buyers of new build homes. 

The new scheme, labelled Rate Reducer, launched this month with Barratt Developments, Halifax and Virgin Money.  

Barratt Homes, who are the developers of Folliott’s Manor in Stourport, said that for some buyers with a high deposit or equity, the scheme could make rates below 1.89 per cent available. 

The scheme is also said to offer more power to consumers with their monthly outgoings which will give more people the confidence to make their first or next home move. 

Kidderminster Shuttle: The Ellerton-style home at Folliott’s Manor in Stourport The Ellerton-style home at Folliott’s Manor in Stourport (Image: Barratt Homes)

The founder of Own New, Eliot Darcy, said: "Our ethos is to make homeownership and mortgage lending in this country open to more people and we are confident that the launch of the Own New Rate Reducer will achieve that. 

"Alongside the national lenders and housebuilders who have signed up to the scheme, we believe that Rate Reducer will be a significant boost to many people's home-buying dreams. 

"People can benefit from Rate Reducer whether they have a small or large deposit. For some people who already have equity in their home, it could herald the return of the sub-1 per cent mortgage deal."

Own New Rate Reducer works by using incentive budgets which housebuilders offer to customers to reduce their monthly mortgage payments over a fixed term.

For example, if the housebuilder offers a 5% incentive on a home, Own New Rate Reducer takes this sum and directly offsets it against the mortgage interest to reduce monthly payments.

Buyers can opt to spread the benefit across the first two or five years, depending on the lender’s criteria.

In addition to cutting monthly outgoings during that time, the customer will pay more off the capital value of their mortgage because the interest charged on the loan is lower.

Lenders will still carry out their usual affordability assessment, to check that the purchaser can afford repayments if the interest rate increases once the fixed-term benefit ends.

Independent financial advice must also be sought from a regulated mortgage broker who has completed additional training to access this scheme.

Kidderminster Shuttle: Folliott's Manor Kingsville show home gardenFolliott's Manor Kingsville show home garden (Image: Barratt Homes)

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.

Steve Mariner, sales and marketing director at Barratt Developments, added: "By launching the Own New Rate Reducer scheme we are helping more people to be able to afford a home.

"The scheme gives buyers the financial boost they need to get them onto the property ladder.

"They will be able to compare all the options available to them to make sure they get a mortgage product that is right for them and in their long-term financial interests."