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Castle Trust set for FSA approval

The FSA has notified Castle Trust that they are minded to authorise the business, pending confirmation of capital funding.

The final authorisation for the firm depends on securing £50m in capital funding from private equity firm JC Flowers.

The head of marketing at Castle Trust Mikkel Bates says: “We regard our product as complimentary to the Government shared equity schemes out there because they cover either those who can’t raise a large deposit or those who want to buy a new property.”

JC Flowers has previously provided Castle Trust £15m in funding since the FSA application was completed in June 2011.

Under the terms of the partnership mortgage, borrowers under the age of 55 who have a 20 per cent deposit will be offered an additional 20 per cent in order to make them eligible for a 60 per cent LTV deal.

The interest rate on the borrowed amount is nil for the entire term but when the property is sold, the borrower repays the 20 per cent plus 40 per cent of any increase in the property’s value. If the property has decreased in value, then Castle Trust pays 20 per cent of the loss.

The product will only be available through independent intermediaries who have passed Castle Trust’s professional development accreditation from the Chartered Insurance Institute.

John Charcol has indicated that it will be pursuing the accreditation over the course of the third quarter in time for the launch, likely to be towards the end of the year.

A number of investment products will be launched by Castle Trust to help fund the partnership mortgages.

Investors will be able to access income and growth portfolios with a minimum investment of £1,000 over three, five and 10-year timeframes tracking the Halifax house price index.

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