Mikkel Bates, head of marketing at Castle Trust, says: “We believe we are fairly close to receiving FSA authorisation, and subject to this, plan to launch our partnership mortgages and income house price savings accounts on December 1.”
The mortgage products will offer borrowers under the age of 55 who have a 20% deposit an additional 20%, so they can access a 60% LTV deal from another lender.
When the property is sold or the mortgage term ends, the borrower repays the 20% advance plus 40% of any increase in the property’s value.
If it decreases in value, Castle Trust will pay borrowers 20% of the loss.
It has the backing of JC Flowers & Co, a private equity investor.
There are also plans to provide investment and savings products offering returns based on the Halifax house price index.
Bates confirmed that Castle Trust will not accept any direct applicants for its partnership products and will distribute them through selected advisers.
The lender, which is headed by former FSA chairman Sir Callum McCarthy, announced its plans to launch into the mortgage market in June and since then has recruited an eight-strong senior management team.
Aaron Strutt, head of communications at Trinity Financial Group, says Castle Trust’s products will be a welcome addition to the market but are unlikely to have a huge impact.
He says: “Partnership mortgages will give borrowers another option to consider as an alternative to shared equity or high LTV deals, but I doubt there will be vast demand as they are only open to those who have already saved for a 20% deposit.”