I read Mortgage Strategy reporter Tessa Norman’s blog about Castle Trust’s shared equity scheme last week and was unimpressed by the deal.
It will offer borrowers 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 rise in the property’s value, but if it drops in value Castle Trust will pay 20% of the loss.
As a first-time buyer I will stay away from such deals. They are only designed to prop up house prices artificially and make profits for the company and builders.
First-time buyers should save for a deposit like everyone else. House prices will fall until they reach normal levels. This scheme will just trap buyers into debt.