Property News

Wednesday, August 23, 2006

The Never-Ending Mortgage

Kent Reliance building society have brought in what is being dubbed as a 'never-ending mortgage'.

According to Kent Reliance "The concept is very simple. A person can pay their mortgage on an interest-only basis for their lifetime. When they die the mortgage and the property pass to the 'beneficiary' who can continue the mortgage or pay it off"

The beneficiary is then free to choose whether to carry on with the interest-only mortgage indefinately, sell the home, take out an alternative mortgage or pay off the debt by other means. However, the inter-generational mortgage has its drawbacks. The building society would still own a large portion of the home and each beneficiary would be left with a substantial mortgage as interest on the loan is only ever paid off rather than the loan itself. And not many children would find the prospect of inheriting their parents' debts appealing.

Such mortgages are popular in other countries such as Switzerland and Japan.

0 Comments:

Post a Comment

<< Home