Castle Trust launches
A new financial services company called Castle Trust has launched (1 October) with the aim of revolutionising the UK retail mortgage market.
It will also enable people to benefit from the UK housing market without having to buy a property.
Castle Trust’s Partnership Mortgages are for 20% of the value of an owner occupied home alongside a repayment mortgage of up to 60% from a traditional lender and a deposit of at least 20%.
There will be no monthly commitments on the Partnership Mortgage and Castle Trust will share 40% of any profit made by the homeowner when they sell or at the end of the mortgage term. The company will also share 20% of any loss made if the home was bought with a Partnership Mortgage.
Investment products
Funding for Partnership Mortgages will come through the two new investment products launched by the company. The Castle Trust Income HouSA can be taken out for terms of three, five or ten years and the capital value will track any rise or fall in the Halifax House Price Index and it pays an annual income of between 2% and 3%, depending on the term of the investment.
The Castle Trust Growth HouSA can be taken out for the same terms and offers a gain of between 1.25 times and 1.7 times any increase on the Halifax House Price Index over the term, or a loss of between 0.75 times and 0.3 times any decline.
Both HouSAs are available for investments between £1,000 and £1million, and they qualify for ISAs, Junior ISAs and for SIPPs.
Mortgage rejections
Research from Castle Trust reveals that as many as 1.57 million people have had mortgage applications worth around £227 billion rejected in the past five years, equivalent to an average of £144,600 each.
This was despite the average deposit or equity in the property for these rejected mortgages being around 20% while 794,000 of those turned down had deposits or equity of more than 20%.
Comment
Sean Oldfield, chief executive officer, of Castle Trust, said: “We have been working on this proposition for many years, and having secured FSA authorisation, built an extremely strong management team and developed a unique and exciting offering, we are raring to go.
“Our research suggests there is significant demand for both Partnership Mortgages and HouSAs as homeowners are looking for new choices in funding their homes and investors want ways to reduce volatility in their portfolios.”
Sir Callum McCarthy, chairman of Castle Trust, said: “Castle Trust aims to bring solutions to problems which have too long affected the UK housing market.
“It is good news for banks and building societies who lend alongside Castle Trust because it reduces the risk on their balance sheet, and good news for consumers as it reduces the risk of homeownership, whether they want to buy a property or invest in housing as an asset class.
“Central to our business is a determination that customers are at all times treated fairly. That is why Partnership Mortgages will only be available through properly trained and qualified advisers.”
The company will only accept Partnership Mortgage applications from mortgage advisers who have undergone its CII-accredited training programme and passed the exam.
Executive team
The company has a strong executive team and a board that includes Sir Callum McCarthy, former chairman of the FSA and non-executive director of HM Treasury, the Rt Hon John Gummer (Lord Deben), former Secretary of State for the Environment, and Dame Deirdre Hutton CBE, non-executive director of HM Treasury and a former chair of the National Consumer Council and deputy chair of the FSA.
The company has received £65 million of equity investment from the private equity firm J.C. Flowers & Co to launch its investment and mortgage business.
