Castle Trust, the equity loans provider, is marketing a solution for London homeowners keen to buy a second home.
It says its equity mortgage enables people who have at least 40% equity in their home to release 20% of the value which they can use to purchase a second property without having to make monthly repayments.
The strength of the London housing market means many homeowners have considerable wealth locked up in their London property but may struggle to fund a second home without cutting back on their lifestyle.
Castle Trust’s analysis of Land Registry data for England and Wales shows average homeowners in Kensington & Chelsea can buy a typical property outright in 103 out of 111 counties and unitary authorities by releasing 20% of the equity in their home. Prices in the borough average £1,149,283, compared with an average of £162,621 for England and Wales as a whole.
Indeed owners of an average-priced house in no less than nine London boroughs can buy a typical property in at least a dozen counties (or unitary authorities) by releasing 20% of the value of their home.
Because Castle Trust charges no rent or interest on their loan, it shares 40% of any increase in value on the sale of the property from the date when the equity mortgage was taken out. If the value of the home declines or stands still, borrowers only repay the original loan amount with no interest at all.
Sean Oldfield, chief executive of Castle Trust, said: “It’s the dream of many city dwellers to own a haven of rural tranquility as an escape for weekend and holidays. The rapid rise in central London house prices during recent years has left many with plenty of equity but with no affordable way to access it. We think we can help.”
At present, the average property price in London is £383,930 – more than double the average for England and Wales.
Castle Trust’s analysis shows the only counties or unitary authorities where Kensington & Chelsea homeowners could not buy outright by releasing 20% of the value of their home are Bath and North East Somerset; Oxfordshire; Hertfordshire; Buckinghamshire; Wokingham; Surrey; Windsor & Maidenhead and, of course, Greater London.
