Intergenerational Mortgage !!

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Sleepy_2
Sleepy_2 Posts: 95 Forumite
in Mortgages & endowments
I dont know if anyone has seen this new type of Mortgage (to the UK anyway).

Parents can now pass their Mortgage onto their kids...

http://money.guardian.co.uk/news_/story/0,,1856648,00.html

Do you think with the huge increase in House Prices that this type of Mortgage will be successful ?

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  • F_T_Buyer
    F_T_Buyer Posts: 1,139 Forumite
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    You mean, kids can take on their parents debt. Debt cannot be passed on to anyone opon their death without their permission.

    It won't work. People can't afford prices (via interest only) today. It's just another desperate attempt by the banks to keep the whole scam going.
  • dunstonh
    dunstonh Posts: 116,567 Forumite
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    Not a very good article is it.
    Chief executive Mike Lazenby said that under the intergenerational mortgage a child inheriting a £400,000 home and a £150,000 mortgage would not pay inheritance tax because the value of the estate passed on was only £250,000, and below the inheritance tax threshold.

    What about all the other assets? What if the estate doesnt have enough liquid assets to pay the inheritance tax bill and the house has to be sold?

    I dont see this as becoming mainstream. I mean "here you go kids, dont worry about running up your own debts, have ours instead". ;)

    You dont see generations of families living in one house nowadays. With life expectancy what it is, children are often in their 50s/60s before parents die and by then they have their own house and debts.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • i_am_really_rich!!
    i_am_really_rich!! Posts: 115 Forumite
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    These are all the thoughts that I had. The only very small advantage that I can see with this is lower payments because you are paying interest only. What about when you retire?? Most of us who have a mortgage look forward to it being paid off by the time we retire at the latest?? With the pension crisis that is being talked about all the time, why would any retired person want to pay a mortgage. No thanks, not for me.
  • nelly_2
    nelly_2 Posts: 17,863 Forumite
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    i_am_really_rich!! wrote:
    These are all the thoughts that I had. The only very small advantage that I can see with this is lower payments because you are paying interest only. What about when you retire?? Most of us who have a mortgage look forward to it being paid off by the time we retire at the latest?? With the pension crisis that is being talked about all the time, why would any retired person want to pay a mortgage. No thanks, not for me.

    Correct! however, there are enough morons willing to pay just to "get on the ladder" they think it is the be all and end all off life, to own a house, even though an [strike]idiots[/strike] interest only mortgage means they never will, ive been reading about loads of people who are getting IO mortgages and 'hoping' a way of paying the rest off will turn up.

    By far the best jaw droppingly stupid answer I got off one bloke was, "after 25 years you just get another mortgage"................... kinidiot :)
  • mi-key
    mi-key Posts: 1,581 Forumite
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    Couldnt believe it when I heard about this - rent a house from the bank for 100 years ???!?!?!

    Sounds to me like this is designed for terminally stupid people TBH !

    I can see the benefits from the banks point of view - they buy a house now for X amount, and make 10 or 20 times what it cost them in interest over the years, all the time still owning the house, which only goes up in value, so if it ever needs to be sold, they make money on that as well.
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