Intermediary Product Guide

Transcription

1 Intermediary Product Guide

2 Buy To Let Equity Loan The Buy To Let Equity Loan helps your clients gear up their buy to let borrowing by topping up their existing loans. As a second charge loan, there is no need to disturb the existing mortgage when capital raising, so it is a very practical alternative to remortgaging. Clients can borrow up to 20% LTV from Castle Trust, up to a combined maximum of circa 85% LTV. This is a unique solution that can help your clients expand their portfolios by gearing up on existing assets. Alternatively your clients can use the product to pay down existing borrowing and improve cashflow. 0 No additional rental stress test No monthly payments Loan repaid along with a share in growth in the property value Top up BTL loans to 85% LTV Equity Traditional BTL mortgage 65% LTV 85% LTV Equity BTL Equity loan Traditional BTL mortgage Diagram shows an example of how a client could top up their buy to let borrowing from 65% LTV to 85% LTV, by using the Buy To Let Equity Loan. 2 Find out more

3 Example Expanding a portfolio Mr Grant had a buy to let property worth 350k, with an existing mortgage 255k (73% LTV). He wanted to raise funds but a remortgage was proving difficult due to the rental assessment. His financial adviser recommended the Castle Trust Buy To Let Equity Loan, which was used to raise 42,500 on the existing property. This was then used as a deposit for the purchase of a new buy to let investment. Example Paying down existing loan Mrs Wilson had a buy to let mortgage which was at 85% LTV with monthly payments of 576, on a rate of 7.29%. She wanted to find a way of reducing her payments but remortgaging was proving problematic due to the LTV. After advice from her financial adviser, Castle Trust provided a loan of 20% LTV. The capital raised was used to pay down the existing buy to let mortgage to 65% LTV to reduce the client s monthly payments. Did you know? Clients can use the product for Let to Buy Company lets acceptable Expat borrowers acceptable We lend on single properties and portfolios 3

4 Index Profit Share Mortgage The Index Profit Share Mortgage (IPS) is a flexible solution for HNW and BTL clients. The Index Profit Share Mortgage has no monthly payments and is an alternative to our other products for clients who may prefer to link our profit share to an independent index the Halifax House Price Index rather than to the value of their own property. 25k A second charge loan with no monthly payments (first charge available on unencumbered BTL) Available to buy to let clients, high net worth individuals and clients raising capital for a business purpose (see eligibility) Minimum loan size 25, k Minimum property value 250k ( 50k for BTL) Clients can potentially borrow up to 50% of the property value from Castle Trust Term 1 to 5 years Repayment Clients repay the initial loan PLUS one of the following options: The Growth Version: (2 x growth in the Halifax House Price Index) x initial loan. The Income Version: 1 x growth in Halifax House Price Index plus circa 5% annual yield - which is capitalised. The Bespoke IPS: Between Growth and Income, for example 1.5 x growth plus 2.5% yield; or less growth can be chosen, for example 0.5 x growth plus 7.5% yield. Please note that on repayment the client will repay the initial loan, plus the greater of the Index Profit Share (if any), and the Minimum Repayment Amount (which is at least 2.5% p.a. simple). 4 Find out more

5 Example Growth option Castle Trust advances 225,000 on a farmhouse in the East Midlands worth 1.5m. The loan is repaid after 4 years, during which time the Index has risen by 14%. The principal loan is repaid PLUS 2 x the Index rise x initial loan. This works out as: Initial loan 225,000 PLUS (2 x 14%) x 225,000 = 63,000 The total repayment is therefore 288,000 ( 225,000 plus 63,000). Example Income option Castle Trust advances 300,000 on a 5 bedroom house worth 2.5m, to provide capital for investment purposes. Loan is repaid after 5 years during which time the Index grew by 20%. The principal loan is repaid plus 1 x the Index rise plus 5% of the loan per annum. This works out as follows: Initial loan 300,000 PLUS (1 x 20%) x 300,000 = 60,000 PLUS 5% of the initial loan per annum (compounded) = 85,008 The total repayment is therefore 445,008 ( 300, , ,008). Eligibility All IPS loans must qualify for exemption from the CCA. There are no exceptions to this rule. Essentially there are three relevant exemptions. 1 High Net Worth applicant: client must have an accountant s certificate to meet this test to the effect that (and sign a declaration to that effect), showing for the last financial year: either the borrower s net income after tax and national insurance was more than 150,000 or the borrower s net assets exceeded 500,000 excluding any value locked up in the primary dwelling, certain life assurance policies or any pension entitlements. 2 Securing the charge against a buy to let property. 3 Using the loan for a business purpose: the borrower must demonstrate that the proceeds of the loan are to be used wholly or predominantly for the purposes of a business. Did you know? Clients can use the product for Let to Buy Company lets acceptable Expat borrowers acceptable We lend on single properties and portfolios This product is available to limited companies HMOs are acceptable with this product 5

6 Flexible Zero Mortgage The Flexible Zero Mortgage is completely original and provides an alternative to other forms of short and medium term finance. There are no monthly payments. Instead, at redemption clients will repay the initial loan plus all rolled up interest. This is a second charge loan (first charge available on unencumbered BTL) suitable for your high net worth and buy to let clients who would prefer to agree a fixed rate of interest. It is also suitable for clients raising capital for commercial purposes. 80 % LTV Clients can borrow up to 50% LTV (and a combined LTV of 80% including rolled up interest). Term 1 to 5 years. % A fixed rate of interest is set at the outset of the loan and rolled up to the end of the term (or earlier if the client wishes). Rates will be on a case by case basis and will be dependent on a range of factors, such as term and LTV. Get in touch to discuss a case. At maturity of the loan (or earlier if the client wishes), the original principal plus all the accumulated interest is repayable in a single payment. 6 Find out more

7 Case Example Mr Hendry is a British citizen, living in Spain, and owns a buy to let property in southern England valued at 750,000. He wanted to raise capital in order to help buy an additional investment property and was attracted to Castle Trust because of the absence of both monthly payments and any additional stress test on the rental income. After meeting with his mortgage adviser, who discussed the Castle Trust product options available to him, it was agreed to select a Flexible Zero Mortgage, as Mr Hendry liked the certainty of a fixed rate with interest rolled up and paid at the end of the 5 year term. At the end of the term, the initial loan of 200,000 will be repaid along with the rolled up interest of 90,514 (making a total repayment of 290,514), based on a fixed rate of 7.49%. Eligibility The eligibility for the Flexible Zero product is the same as our Index Profit Share Mortgage. Did you know? Clients can use the product for Let to Buy Company lets acceptable Expat borrowers acceptable We lend on single properties and portfolios This product is available to limited companies HMOs are acceptable with this product 7

8 What else should you know? Your Local BDM We have a national team of highly experienced Business Development Managers who are there to help you. Please call your local BDM to discuss a case you will find details of our BDMs on our website. Online Applications You can make an online application via our intermediary website. You will need to obtain a password and user name, which will be supplied to you as part of the accreditation process. Becoming An Accredited Adviser Our products are only available via accredited advisers. You can become accredited by undertaking our training. Just contact your local BDM who will explain the process. You can find your local BDM s contact details on our website. Find out more Your client s property is at risk if they do not keep up payments on a mortgage or any other loan secured to it. This information is for professional advisers only. Castle Trust is the trading name of Castle Trust Capital plc, which is authorised and regulated by the Financial Conduct Authority. Loans are subject to status, terms & conditions. Registered in England & Wales Company number Registered office: 10 Norwich Street, London EC4A 1BD. M219_01/15