New Home Owners And Snagging Forum
Home Owners => Mortgages and Insurance => Topic started by: Philofacts on July 04, 2011, 12:48:38 pm
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Backed by US private equity firm J C Flowers, newly launched Castle Trust has brought out a Partnership Mortgage.
Under the scheme Castle Trust lends you up to 20% of the value of the home you intend to buy. This enables homebuyers to boost their deposits so that they can qualify
for a bigger range of available mortgages - often at much lower rates.
The Castle Trust loan is interest free for up to 25 years with no repayments due. But when it is time to sell you agree to give them 40% of any increase in value of the home in addition to the original loan amount.
So after five years if prices rise by 20% and you took out a loan of £80,000 with Castle on a £400,000 house you would be paying Castle around 8% a year for it's loan.
If prices rose by 2% over the five years the equivalent interest rate would work out at 0.8%.
It is basically a re born shared appreciation mortgage.
It should be noted that many traditional lenders may not be prepared to offer their main mortgage loans to a buyer who has borrowed some of their deposit.