the rest want to trade up to a bigger property by topping up their LTV. Guerin says the business plan


makes conservative estimates but he’s confident once they get the products on the market, they’ll be a hit.


DIsTrIbuTIon Reports following the launch of the brand suggested that the big lenders wouldn’t be keen to do business with Castle Trust. But Guerin puts this theory to bed. “We have had and continue to have a


number of conversations with the usual parties you’d expect to be lending in the mortgage market – the key primary lenders,” he says. “The key benefits for these parties are


that it initially reduces the risk of their own exposure. Rather than having a book with a lot of 80% LTV mortgages, they can have more 60% LTV deals. “This is unlocking funds for the


mortgage market and for people wanting


to buy homes.” He also confirms Castle Trust plans


to lend solely via intermediaries on a national basis. Any network or mortgage club


partnerships are still tightly under wraps however but he says the firm is in “positive discussions with national distributors”.


To bear In mInD One word of warning has been levelled at the idea of the Partnership Mortgage by industry pundits – namely the fairness of Castle Trust taking a 40% share of the rise in property value when the borrower comes to sell. In pure numbers terms this could prove


to be more expensive for borrowers than taking an 80% LTV deal and paying the higher rate over however long they hold


the property. “Very clearly it’s not in our or the


customer’s interests to have any misunderstanding about the product they’ve chosen to take,” says Guerin. “Up front we will only be distributing


this product through people who are accredited and trained to a standard where we believe they can give advice on


suitability as well as eligibility. Explaining different house price scenarios at application stage will be very clear and full.”


The nITTy grITTy Guerin goes on to say there’s “no short form here” when borrowers apply for the partnership mortgage. “We will be doing affordability checks,


credit bureau searches and underwriting,” he says. Guerin says that, in line with impending


changes suggested in the Mortgage Market Review, Castle Trust will also need to see an intended repayment vehicle other than the potential equity uplift in the property. In a sense this all remains theoretical


while the FSA drags its heels on authorising Castle Trust but Guerin is confident things are on track for a full launch perhaps later this year. And for brokers, who have been


promised a monopoly on distribution, it is welcome news. Whether the innovation will catch on is


a waiting game then, but it is good to see what looks like a serious attempt in the making. n


THE PRODUCTS


THE PARTNERSHIP MORTGAGE A second charge mortgage available at 20% loan to value with no monthly payments at point of application taken alongside a repayment mortgage up to 60% LTV with another lender. The cost of the partnership mortgage is delayed until the property is sold, improving affordability.


Borrowers repay the partnership loan plus 40% of any increase in property value or the loan minus 20% of any fall in value at the point of sale. Castle Trust estimates this could reduce monthly payments by up to a third. Ages 18 to 55 are eligible; not available beyond 65. No new build properties.


THE HouSA A Halifax house price linked savings product in the style of a traditional ISA. Provides a fixed quarterly income on amounts of £1,000 plus; available on fixed terms of 3, 5 and 10 years.


mortgAge iNtroDucer AUGUST 2011 43


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