Published: 20 December 2022
A new scheme designed to make 95 per cent mortgages more readily available to people buying new homes will be launched in the new year.
Own New will launch its 95 per cent mortgage product with Darlington Building Society early next year, alongside more than 50 housebuilders, offering a route to owning a new home for buyers with low deposits.
Initially available in the North East and Yorkshire, Own New will soon expand nationwide. It will be open to first-time buyers and home movers buying new homes.
Own New was designed by Market Mortgage to help homebuyers who can afford repayments, but don’t have a ‘bank of mum and dad’ or other source to lean on for a deposit. The scheme will create better mortgages for new builds and make them available to a broader range of people.
Eliot Darcy, founder of Market Mortgage, said: “The launch of our first 95 per cent mortgage product comes as Help to Buy has closed applications and the market is emerging from a difficult period.
“Help to Buy has proven that there is a need to support low-deposit lending. Own New will plug the gap it leaves without reliance on taxpayer funding.
“We are delighted to announce Darlington Building Society as the first lender to join Own New, reflecting its foresight, willingness to innovate and agile structure.
“Darlington’s focus on manual underwriting means each application will be considered by a person rather than an algorithm. This will particularly help people with non-standard circumstances, for example those who are self-employed, have multiple sources of income or who are in the early stages of their career and looking to build a credit rating.
“We look forward to working with Darlington Building Society and more than 50 housebuilders who have joined Own New as we work to create a fairer and more competitive system of mortgage lending.”
Own New works behind the scenes with lenders to reduce the risk involved in high loan-to-value lending, meaning they can lend to borrowers with a small deposit at competitive rates. The scheme is funded by housebuilders, who pay a small fee on completion of the sale.
There is no cost to the homebuyer. They simply apply for a standard mortgage in the usual way through Darlington Building Society and own 100 per cent of their home.
Andrew Craddock, Darlington Building Society Chief Executive, said: “Darlington Building Society has a long history of making people’s dreams of homeownership a reality, and this is particularly true within our local heartland.
“We are always looking for creative ways to help people get onto the property ladder, and this is particularly important now as the Help to Buy scheme comes to an end.
“As costs for all of us continue to increase, raising large deposits is out of reach for many. Our partnership with Own New is an exciting opportunity for us to combine our award-winning mortgage proposition with their innovative solution for borrowers with low deposits, so we can continue to make homeownership accessible
“Darlington Building Society’s manual underwriters ensure that a person reviews applications, not a computer, to apply common sense to each individual case and help more people into homes of their own.
“Furthermore, Darlington Building Society is serious about climate change. We are looking at how we can promote a greener housing market through our mortgages. A new build property is built to be more energy efficient which helps protect the environment as well as benefiting homeowners with cheaper energy bills”.
Housebuilders from national PLCs to smaller regional developers have signed up to Own New. Mortgages will be available through Own New with more lenders in the coming months.
Among the housebuilders offering Own New from the end of the month is Barratt Homes. Adrian MacDiarmid, Head of Mortgage Lender Relations at Barratt Developments, said: “Home ownership remains an aspiration for very many people, so we are very pleased to support products that help make that dream a reality.
“We are looking forward to working with Own New and Darlington Building Society so that 2023 is a year to remember for our customers.”
North East-based Homes by Esh will also offer mortgages through Own New.
Colin Willetts, Deputy Managing Director at Homes by Esh, said: “The Own New scheme has come to fruition at the perfect time given the rising cost of living and the end of Help to Buy. We want to provide our customers with as many options as possible to help them buy their next home, and Own New will allow more people to buy a new build property with a smaller deposit.
“We look forward to supporting more customers who are eager to take the next step in their buying journey.”
Eliot was inspired to develop a solution to the deposit conundrum by his experience of buying his first home in his 20s.
He said: “I firmly believe that home ownership should be based on prospects, not parents.
“Not everyone has a ‘bank of mum and dad’ at their disposal and that shouldn’t deny them the opportunity to own a home. If people can afford to make the mortgage repayments, that ought to matter more.
“When my wife and I bought our first apartment, securing a mortgage – especially at a reasonable rate – was a struggle. Yet I had friends with wealthy parents who breezed through the process, were offered larger mortgages and better rates simply because they had access to a large deposit from parents.
“I decided that I would do something about this if I could.”
Eliot left his job in investments to start Market Mortgage, having secured the backing of Capita PLC as a major investor. With Capita’s support, he has had access to the resources to develop a product that appeals to lenders, investors, housebuilders and their customers, while creating the tech platform to manage the process.
For more information on how to buy a home with Own New and a list of the housebuilders who have already signed up, see OwnNew.co.uk. The scheme will be available to all lenders offering New Build mortgages.