Castle Trust’s equity aid targets divorcing couples

Castle Trust chief executive Sean Oldfield said the product could enable a couple that has a minimum of 40 per cent equity in their home to release up to 20 per cent of the property’s value, if they divorced or separated.

The money could then enable a partner to keep the property, while the other spouse used the released money as a deposit for a new home.

Castle Trust will not charge rent or interest on the loan, but will take a 40 per cent share in any increase in value on the sale of the property from the date the equity mortgage was taken out.

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If the value of the home declines or remains static, the borrowers only have to repay the original loan amount, with no interest.

A survey of 1024 adults by Castle Trust revealed that in 18 per cent of divorce cases, couples sold their marital homes, while 20 per cent lost an average of £34,000 on their homes.

Some 34 per cent of divorces had one or more partner who could not afford to buy their own home, while 15 per cent of cases had two partners who could not afford a new home.

Mr Oldfield said: “Divorce can be one of the most stressful life experiences, often made worse by financial problems that develop as a consequence.

“Equity mortgages can help couples who own their own homes reduce the financial shock resulting from splitting up, and move on with their lives with fewer worries.”

Adviser view

Calvin Brady, managing director of Hampshire-based IFA Andrews Hammond Brady, said: “This type of product could be interesting. Options for couples going through a break-up include a Mesher order, where both parties retain an interest in a property until their children come of age, selling a property, and offsetting a property against other assets. These can have issues for people at the lower end of the pay scale when the property is often the largest asset.”