Can a Trust hold a Mortgage ?

dillydilly

hi, I'd appreciate any views and advice anyone may have on my predicament.
I am acting as executor for the estate of a family member who sadly died recently, naming her children aged 16 and 12 as beneficiaries in her will, to be held in trust until they reach 21. The estate consists solely of a property valued recently around £220k on which there is an outstanding mortgage of £110k - not covered by insurance unfortunately. The property is a detached 3 bedroom bungelow in an attractive Cornish village just 50 yeards from the beach and with distant sea views, hence should have a strong rental value. The children now live elsewhere and the place is currently empty.
The decision I have is to either keep the house as a rental property, or sell the house and invest the funds in low risk cash assets, according to the solicitor. Obviously there's a risk involved with the former in that the value of the property could decline.
The two questions I have are:
1. if I decide to keep the property, could I set up a trust for the children and hold the mortgage in the trust ? ie. will a bank lend money to a trust, or do they insist on lending to an individual ?
2. would the property be treated as a first property, hence not incur any capital gains tax should the value appreciate in the next five years ? Effectively the house belongs to the children, but I'm not sure at their age if they are able to own property.
As I say, and advice and experience would be much appreciated