Four major lenders say they would not lend to borrowers who take out Castle Trust’s new partnership mortgage.
Castle Trust is offering 20 per cent of a property’s value, without any monthly repayments, to customers who already have a 20 per cent deposit. It is designed to cut the borrower’s repaymentswith their primary lender by letting them access lower-LTV deals.
It aims to make a profit by taking 40 per cent of any rise in a property’s value when a borrower sells. It will share 20 per cent of any loss.
But Santander, HSBC, Barclays and ING Direct have told Money Marketing they do not lend in the shared-equity sector and would not accept clients under these criteria. Lloyds Banking Group and Nationwide both say they would study the product further to see if it would clash with their lending criteria.
Castle Trust chief executive Sean Oldfield says the firm is in active discussions with mainstream lenders, which are “progressing very well”.
If I Were You managing director Rob Clifford says: “The lender has to be comfortable about the amount of personal stake the borrower is putting into the transaction and potentially this does not alter that equation.”
For full indsutry reaction to the Castle Trust launch see this week’s Money Marketing.