Castle Trust will launch its shared equity product, the partnership mortgage, on 1 October.
It will also launch a number of fixed-term investment products linked to house prices, called HouSAs, to help fund the partnership mortgages.
The partnership mortgage allows borrowers under the age of 55 who have a 20 per cent deposit to take out a 20 per cent loan from Castle Trust, making them eligible for a 60 per cent LTV mortgage from another lender.
Borrowers do not pay interest on the Castle Trust loan but must repay the loan in full when the property is sold. If the property increases in value, the borrower must pay 40 per cent of the increase to Castle Trust and if the property decreases in value, Castle Trust will pay 20 per cent of the loss on a house purchase.
The partnership mortgage is only available through brokers who have taken Castle Trust’s Chartered Insurance Institute accredited training course.
Castle Trust chief executive Sean Oldfield says: “This really will be a momentous event in the residential property market because we will be offering investments and mortgages the like of which have simply not been available until now.”
Emba group sales and marketing director Mike Fitzgerald says: “Schemes like this are great and do help but you still need a big deposit to qualify for it.”