Never-ending mortgage launched
Kent Reliance's new mortgage continues indefinitely
Wednesday, 23, Aug 2006 10:28
A building society has launched what could quite literarily be termed the next generation in mortgages - a mortgage designed to be passed from generation to generation.
The 'intergenerational' mortgage, has been launched by Kent Reliance building society, based in Chatham.
The building society explains: "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 mortgage works like any mortgage and is subject to the same principles of ability to repay, affordability and on-going ability to repay through retirement.
"The loan can be any of the mortgage range but it may be that the borrower will take a long-term fix - we currently offer a long-term fix at 5.15 per cent for 25 years."
At the point where the mortgage transfer is not wanted, the loan can be paid off as normal.
However, if the mortgage is accepted, it can pass on from generation to generation indefinitely.
Kent Reliance said: "As house prices tend to rise, there is a benefit that the proportion of the loan relative to the value of the property will decrease over time."
The building society added: "It is possible that inheritance tax may be reduced by this arrangement."
For more information see www.krbs.co.uk