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Major lenders still wary of Castle Trust loan

Major UK lenders remain hesitant about taking on shared equity products such as Castle Trust’s partnership mortgage.

The partnership mortgage was launched last week allowing borrowers under 55 who have a 20 per cent deposit take out a 20 per cent loan from Castle Trust, making them eligible for a 60 per cent loan-to-value repayment mortgage from another lender.

The loan is interest free for a 25-year term but requires a repayment of the original sum plus 40 per cent of the capital gains on the property. Should the property lose value over the course of the term, Castle Trust shares in a 20 per cent reduction.

Castle Trust told Money Marketing it has a panel of lenders in place but is refusing to disclose how many are on the panel or which lenders have signed up.

Lloyds, Santander, HSBC, Royal Bank of Scotland, ING Direct, Nationwide, Virgin Money and Barclays say they would not lend to applicants in a shared equity scheme.

Yorkshire Building Society says it does not have a clear position at the current time and Coventry Building Society says it will keep an open mind.

Last week, new housing minister Mark Prisk praised Castle Trust for devising “innovative ways to help those who want to become homeowners to do so “.

Chadney Bulgin mortgage partner Jonathan Clark says: “Market innovations are to be welcomed in a constrained mortgage market but unless high-street lenders work with them, it will help few borrowers.”

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  1. Shared appreciation anyone? One for the CMCs in 20 years or so!

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