Everlasting Mortgages

Everlasting Mortgages
What does the​ term inter-generational mortgage mean to​ you? If you’re not up to​ date,​ then read on​ for more information on​ this revolutionary move.
It seems that there is​ a​ distinct possibility that lifetime interest only mortgages,​ which we could pass on​ down the​ family,​ may be the​ answer to​ a​ lot of​ home buying problems and worries.
The way the​ scheme works is​ the​ borrower takes out an​ interest only mortgage .​
This means that your monthly repayments are for interest only and no part of​ the​ original sum borrowed is​ repaid .​
Monthly interest payments are appreciably lower than that of​ a​ repayment mortgage .​
If you​ borrow £100,​000 the​ saving on​ repayments could be around £130 per month.
A major feature of​ the​ scheme is​ that it​ means that your children will be able to​ inherit your home and very much reduce the​ dreaded inheritance tax.
In the​ event of​ your death the​ mortgage could pass on​ to​ your children,​ or​ other beneficiary.
On your death the​ mortgage passes on​ to​ your children,​ who have the​ choice of​ either continuing the​ mortgage payments and moving into the​ house or​ selling the​ home and repaying the​ loan .​
They could choose to​ live in​ the​ property,​ treat it​ as​ a​ buy-to-let or​ maybe a​ holiday home for family use .​
The implications of​ this as​ regards inheritance tax are interesting as​ only the​ value of​ the​ house,​ less the​ mortgage amount,​ would be counted as​ part of​ your estate.
There is​ no time limit on​ the​ mortgage and your children could continue to​ enjoy the​ property for as​ long as​ they wished.
Your first reaction to​ all this may be that you​ don’t want to​ pass debts to​ your children but in​ fact these mortgages are extremely popular in​ other parts of​ the​ world .​
The careful Swiss have found it​ works well for them and they’re not known for anything but neat,​ tidy and methodical practices,​ whether it​ is​ for sourcing mortgages or​ making cuckoo clocks! If it​ helps to​ you​ both pass on​ your home to​ your dependants and also reduce the​ amount of​ your hard earned money paid to​ the​ taxman,​ then it’s got to​ be worth some careful thought.
With more and more estates coming into the​ inheritance tax bracket (£285,​000 in​ 2018) someone living in​ a​ relatively modest house could be affected by this tax .​
Many older people would be amazed to​ think that their estate could fall into this category.
It’s an​ increasingly common situation for older people to​ take out equity release schemes where they raise money against their home’s value to​ enable them to​ live more comfortably in​ retirement .​
These schemes can be really expensive .​
a​ mortgage which can be passed on​ to​ their children could be a​ far better bet .​
The interest rate would be much lower and this in​ turn would give them money to​ spend on​ themselves and they could have the​ pleasure of​ helping their children and grandchildren in​ their lifetime .​
Assuming that the​ equity in​ their home is​ greater than the​ mortgage,​ their children are still inheriting an​ asset worth more than the​ debt.
It looks as​ though we’ll be hearing a​ lot more about inter-generational mortgages .​
For more information and help on​ this and other mortgage choices we recommend you​ get on​ line and get some independent advice.
You never know,​ they might eventually come up with a​ more user-friendly name for it​ ……maybe the​ everlasting mortgage will catch on.

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