The bridging loan features a 12-month term
Castle Trust Bank has introduced a new product named ‘Bridge the Gap’, aimed at borrowers nearing the end of their current fixed rate or bridging loans.
This specialist bank seeks to offer an alternative for those hesitant to commit to a new buy-to-let mortgage amid expectations of falling interest rates in 2024. It is also designed to support property investors in establishing a letting history for their property, a requirement by some lenders who prefer to see a minimum of 12 months’ borrowing history before proposing terms.
The ‘Bridge the Gap’ product is structured as a 12-month bridging loan, with the option of serviced interest, featuring a monthly interest rate of 0.52% — translating to an annual rate of 6.24%. The loan includes early repayment charges applicable for only the first three months.
The loan option allows property investors to increase their borrowing capacity from the outset, offering a maximum loan-to-value (LTV) of 75%, inclusive of the arrangement fee. In scenarios where interest is accumulated, the maximum loan reaches 75% LTV gross. The product is marketed with a 5.5% arrangement fee and no exit fee.
“Bridge the Gap is a product that specifically addresses a growing demand that brokers are seeing for bridging finance that can buy property investors time while they wait in hope that rates will continue to fall in the next year,” said Anna Lewis (pictured), commercial director at Castle Trust Bank.
“By introducing a 12-month bridge loan with a reduced interest rate, increased arrangement fee and no exit fee, we can provide investors with the flexibility that they need to best manage the rate cycle.
“If investors have tenants currently paying rent, they could opt to service the loan payments instead of rolling the interest as the monthly payments on Bridge the Gap are more affordable, aligning with rates currently available in the buy-to-let market.”
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