Former Financial Services Authority chairman Sir Callum McCarthy is heading up a new lender called Castle Trust which is seeking regulatory approval to offer mortgage and investment products.
Once authorised by the Financial Services Authority, the firm will offer partnership mortgages, which lend 20% of the value of a property and on which there are no monthly payments.
Castle Trust says its mortgages share the profit or loss with homeowners, as the amount borrowers repay is linked to the change in value of their home.
If the borrower sells their property at a profit, they retain a 60% share of any increase in value and Castle Trust will keep 40%. If the consumer sells their home at a loss, the firm will share 20% of that loss.
Its products are available to home buyers and existing homeowners aged 55 and under who are able to put up an additional 20% of the house value as a deposit, thereby allowing them to access a 60% LTV mortgage.
Sean Oldfield, chief executive officer at Castle Trust, says: “The housing market is the largest asset class in the UK, worth in excess of £4,000bn, most of which has previously been unavailable to investors.
“Castle Trust has been designed to help customers with the two most important financial decisions in their lives – investing their savings and buying their home.”
The firm has the backing of J.C. Flowers & Co, a private equity investor.