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Aug 30, 2006
Kent Reliance Building Society has
launched a new type of mortgage that allows parents to pass on their property
and debt after their death to their children.
According to Kent, their concept of “intergeneration”
mortgage is applicable to interest-only mortgages and it helps people to save
on inheritance tax. Although most mortgages have a 25-year term,
“intergenerational mortgage” has no specific term and the beneficiary would
continue to repay the mortgage while still owning the property, the society
added.
“We wrote to all our customers who have
interest-only mortgages to remind them they have to decide what they want to
do. The inter-generational mortgage is one of the options. They can keep it on
interest only and when they die they pass on the property and the mortgage to
their kids,” says Mike Lazenby, chief executive at Kent Reliance.
The Council of Mortgage Lenders (CML)
noted that the mortgage gave homeowners more choice, though it was quick to add
that children inheriting a mortgage must be aware of its financial
implications. “We have not seen this sort of mortgage in the UK before. These types of products
are quite popular in Switzerland,
Japan and Ireland,” says CML spokesman
Christopher Dean.
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