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

It will offer more power to consumers over their monthly outgoings, which in turn will give many more people the confidence to make their first or next home move. 

For example, if the housebuilder offers a five per cent 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 their 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.

Own New Rate Reducer will launch with Halifax, Virgin Money and Barratt Developments on Monday 26th February.

Other housebuilders across the country will join from Monday 4th March.

Other developers who have supported and are signed up to take part include Persimmon, Taylor Wimpey, Bellway and Berkeley Homes. 

Lenders Gen H, Furness Building Society and Perenna have also confirmed they will soon be offering mortgages through the scheme.

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.

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Eliot Darcy, founder of Own New (pictured above), said: “Our ethos is to make home ownership 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. 

“We believe that Rate Reducer will be a significant boost to many people’s home-buying dreams. 

“This is just the product to stimulate the housing market and to give more people a helping hand and initial boost 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. 

“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.”

Steve Mariner, sales and marketing director at Barratt Developments, said: “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.”