Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
Castle Trust have introduced a new short term Buy to Let product called the Flexible Zero Mortgage, which is designed as an alternative for raising short/medium term finance from 1 to 5 years.
The USP (unique selling point) is that there are no monthly payments, because the interest is accumulated and added to the principle loan amount repayable on redemption.
Castle Trust will want a first legal charge on Buy to Let property with a maximum 50% Loan to Value and a fixed interest rate charged from 7% to 10% dependent on individual factors such as term and LTV. There is also a 2% arrangement fee and an early repayment charge of 5% in the first two years.
If you have an unencumbered property you can therefore release up to 50% LTV for funds to either expand a portfolio or perhaps use it like a long term Bridging loan in a renovate and flip strategy. You are then paying £0 per month keeping your expenditure low and cash flow high. The loan would then have to be repaid or refinanced in 5 years time.
Product Criteria includes:
The product looks expensive and depends realistically on having unencumbered property as security, but in the right circumstance it could be viewed as a form of lower cost longer term Bridging facility and you would need an exit strategy for redemption.
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