17:56 PM, 14th November 2013, About 9 years ago
Castle Trust Equity Loan Finance has the potential to be the biggest game changer in the UK mortgage market since Buy to Let came about in 1996.
Not only does the Castle Trust equity loan finance product allow you to borrow more without having to refinance, there are also no monthly payments, EVER!
Instead of paying interest and capital repayments as you would on a normal mortgage or second mortgage, Castle Trust take a share in the capital appreciation of your property when it is sold. If your property doesn’t go up in value by the time you sell it then all you owe Castle Trust is what you borrowed, they make no return. If your property does go up in value when you sell it then Castle Trust take a share in the profits.
As you might imagine, the Castle Trust Equity Loan Finance offer has captured the imagination and creativity of landlords because this mortgage product can enable them to raise money to buy more properties without affecting their cashflow. The art of borrowing is to make your borrowed money work harder than it costs – this mortgage product certainly has potential for landlords to use it that way.
I have already spoken to a few buy to let mortgage lenders about the Castle Trust offer and feelings are mixed. Some don’t like it because they feel it could affect their risk profiles, however, so far these lenders haven’t been able to give me a logical reason as to why they feel this way. On the other hand we have lenders which are considering designing new BTL products at 65% LTV with a view to dovetailing them into the Castle Trust product. They are considering this on the basis of there risk being lower than normal at 65% LTV and overall serviceability of debt also being better due to there being no monthly interest payable on the top-up 20% of a loan provided by Castle Trust which takes overall gearing up to 85%.
Landlords are acting on this too – who knows how long it will be available for? I first wrote about the Castle Trust deal for landlords and our hand picked panel of advisers just a couple of weeks ago. Since then we’ve have an incredible response and referrals to our recommended advisers have already been converted at an incredible 90% plus conversion rate into decisions in principle from Castle Trust. Yes, they are a slick operation to deal with too, it’s possible to get a Decision in Principle within 24 hours of contacting one or our recommended broker panel members.
We have quite a debate going on amongst landlords and professional advisers about the pro’s and cons of the Castle Trust equity loan finance products elsewhere on this website. Therefore, I will not be adding a comments section to this particular post. However, do pop over to the thriving discussion over on this thread and read what your peers have to say about the product. Feel free to ask questions yourself too 🙂