/24-7PressRelease/ - LONDON, UK, August 26, 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. The society said that this concept of 'intergeneration' mortgage is applicable to interest-only mortgages and it helps people to save on inheritance tax
A new mortgage which permits children to inherit their parent's debt and property after they die was launched by Kent Reliance building society.
Most mortgages have around 25 years term. But 'intergenerational mortgage' has no specific term. The beneficiary would continue to repay the mortgage while still owning the property.
The Council of Mortgage Lenders (CML) commented the mortgage gave homeowners more choice. But also, CML warned that children inheriting a mortgage must be aware of its financial implications.
Mike Lazenby, the chief executive at Kent Reliance said: "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."
CML spokesman Christopher Dean commented: "We have not seen this sort of mortgage in the UK before. These types of products are quite popular in Switzerland, Japan and Ireland."
"It gives consumers more choice. It might be an advantage to people on a low wage entering home ownership, where their mortgage may take longer to pay off. It means parents can pay off some of the mortgage and leave some to the children."
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