The firm is waiting for authorisation from the Financial Services Authority, after which it will offer a house price linked savings account and a 20% loan to value partnership mortgage, designed to top up borrowers taking a 60% LTV repayment deal with another lender.
The partnership mortgage has no monthly repayments and clients repay the loan plus 40% of any increase in property value or the loan minus 20% of any fall in value at the point of sale.
It is hoped the structure will help borrowers’ affordability by giving them access to the lower rates available on lower LTV deals, while making this available to borrowers with a 20% deposit. It estimates this could reduce monthly payments by up to a third.
The firm applied for FSA authorisation in February this year and said although it was engaged with the regulator, it could not confirm a full launch date.
It plans to lend the money it takes through its house price savings accounts – HouSAs. The savings account provides a fixed quarterly income as well as being linked to the Halifax house price index.
Clients can invest in a HouSA from just £1,000.
The investment and mortgage experts making up Castle Trust’s management team are led by Sean Oldfield, who has spent the last two years preparing for the launch of Castle Trust.
That preparation has involved developing, researching and stress-testing the product suite and the unique business model.
The extensive customer research undertaken over the past two years by JC Flowers and Oldfield has indicated significant pent-up demand for the company’s proposed products from both investors and homeowners.
Oldfield’s team is supported by seven non-executive directors, each with a solid background in financial services.
The Castle Trust chairman is Sir Callum McCarthy, a director of HM Treasury and former chairman of the FSA.
The Rt Hon. John Gummer, Lord Deben, chairman of the Association of Independent Financial Advisers and former Cabinet minister is also a non executive director as well as Dame Deirdre Hutton, a director of HM Treasury and former deputy chair of the FSA, chair of the National Consumer Council and the Personal Investment Authority Ombudsman Bureau.
Dr David Morgan AO [Order of Australia], managing director of J.C. Flowers & Co. Europe and Asia Pacific and former CEO of Westpac Banking Corporation, Patrick Gale, a non-executive director of Aegon and former CEO of Sesame, Richard Ramsay, a director of Redstone and Chairman of Wolsey Group and Northcourt, and Timothy Hanford, a director of Pension Insurance Corporation and former director of Schroders are also non-execs.
Castle Trust CEO, Sean Oldfield, said: “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.”
