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Mortgages - Never Ending Perpetual Mortgages How do you like the idea of paying the minimum monthly mortgage payments possible on your mortgage? How do you like the idea of being able to pass both your mortgage including your house onto your children? It may seem rather far fetched but the latest type of mortgage to be offered is known as a perpetual or “never ending mortgage”. The idea is that you are able to make interest only payments, for a particular unspecified time period. If you die or are unable to keep making payments in retirement you might give the house including mortgage to your children. the means you never have to worry regarding paying capital repayments to try including pay off the mortgage capital. It is being offered by a small mortgage company called Kent Reliant Building society. They claim that the unique mortgage provide has been particularly popular. The obvious drawback to such a mortgage is that you including your descendents could end up paying back a much larger share of interest to the bank. Usually a standard mortgage reduces the capital on which you pay interest. a particular interest only mortgage doesn’t actually reduce the debt you owe to the bank. Another problem inherent in such a mortgage scheme is that at the time you become a particular OAP including absolutely no longer have a wage coming in your pension may be insufficient to pay back the monthly mortgage charges. Furthermore although the schemes is attractive if house prices continue to rise. Many commentators argue that house prices are likely to plummet quite soon. It is worth remembering the happened in the early 1990s (15% in 1 year) it additionally occurred on a larger scale in the Japanese housing market. If house prices did fall you will have negative equity including will still have to make the monthly mortgage payments. However having said all that there are reasons to suggest the new mortgage scheme is not as daft as it may sound. There are some good economic reasons for pursuing such a mortgage scheme. Firstly by passing the house including mortgage to your children you could avoid paying inheritance tax. However it is worth remembering in the UK the threshold for inheritance tax is £285,000 therefore the is only a particular issue if the mortgage is for more than this. A stronger argument for a never-ending mortgage is that because house prices are so expensive the interest only scheme provides a particular opportunity for first time buyers to obtain a house. Without such a particular interest only scheme they will be unable to purchase including will be left renting which is not good from a financial perspective. Finally the particular interest only mortgage means you don’t have to worry regarding a particular alternative investment scheme to pay off the debt by the end pertaining to the mortgage period. If you are able to take on a repayment mortgage with absolutely no obvious financial hardship there is absolutely no reason to take on a never-ending mortgage scheme like this. If however your budget is stretched it could be a good option. It is quite likely such a scheme could become more popular. It is worth noting in Japan 100 year mortgages are already quite popular. More on Never Ending Mortgages
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