I almost spit up my diet coke on the tube this morning when I looked over my shoulder and saw this headline:
The Mortgage that Never Ends
Parents will be able to hand down their home loans onto their children under a radical shake-up of Britain's mortgage industry which starts today.
In a revolutionary move, homeowners would never need to repay a single penny of their mortgage before they die.
Instead, the debt will be passed to their offspring, allowing them to slash the amount of inheritance tax they would have to pay.
One expert yesterday nicknamed the new mortgages as 'the debt that never dies' as the loans can continue to be passed on through the generations.
With these radical new home loans, parents can take out a cheaper interest-only mortgage which passes to their children after their death.
James Cotton, mortgage specialist at advisers London & Country, said: 'One of the big trends in the housing market has been parents helping their children get onto the property ladder.
'This generation of first-time buyers is having a lot of problems getting onto the ladder. This is just the ultimate extension of the 'parents helping their children' principle.'
August 23, 2006
Another sign of the Housing Apocalypse? The never-ending mortgage
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29 comments:
I love it! Housing debt is bad....pass it on!
Just in one day, there is oh, so much more negative housing news!
Why not just sell your children for cash?
That may very well be headlines for tomorrows news.
"People caught pimping kids to pay mortgage"...
Its a joke, I really dont think its funny, but you know what desperation breeds...
people say they "own" a home. They don't, they pay a mortgage. Hardly anyone owns a home outright. They rent the money just as others rent an apartment
Interest only is the perfect example of that. This mortgage idea is just a spin on that stupidity.
Unfrickingbelievable!
Good lord.
F'ing Boomers
Quote from orginal article:
"The children would only have to make a decision about whether or not to take on the mortgage when their parents died.
If they did not want the mortgage, it could be settled by selling the house or repaid by other means, such as an insurance policy or the sale of other assets."
Question: Ok, lets say you DONT want the house and mortgage attached to it after your parents died. Is it still YOUR forced-upon legal responsebility to regulate that house-dept by selling it?
If so - what if the house is unsaleable, due to economic world-depression? What if the house gets destroyed by "force majeure" style nature-disaster not covered by insurance?
Could I take over the MORTgage and then pay it off and still get the benefit? HHHMMMMMMMMMMMMM.
Help, I've fallen off my computer chair LMAO and can't get up! What happens if the kids all die with the parents in a auto wreck, the house falls off a cliff, burns down, is damaged beyond repair, or the kids don't want it. You can't force someone to take an inheritance (I don't think!)Who eats the mortgage on an unwanted/over-valued/useless house that cannot be sold?
P.S. I loved the part about selling the kids.
OMG! So basically, the loan never needs to be repaid. Why charge a fee at all? Why not just give the money away?
OK, so the loan/debt gets passed on to the kids. Is it a fixed rate? Not a completely bad idea if you can keep a low rate, low balance and watch the equity grow. I'm not saying that prices never go down, but over the kids' lifetime it might work to their advantage with a low fixed rate.
How does this differ from the feudal system?
I knew the endgame of capitalism was feudalism. Oh well, most of you voted for it.
I was JUST going to say feudalism.
Umm...I don't want my kids to be
SERFS,
thanks anyway.
Also: Most of us did NOT vote for this. Not even close. Such a simple equation, really:
State+Corporation=Fascism
Check your Dictionary.
The real snag here is a couple of generations later, the house will be falling apart and they'll still owe the full amount!
If this comes to the US and my parents try and pull this on my, I swear I am leaving the country.
If most of you didn't vote for this we wouldn't have republicans in power. Republicans are the biggest cheerleaders for savage capitalism and its resulting exploitation. They cheered as the top end pulled away from the rest of us which causes the cost of living to be skewed higher.
There's more profit in serving the top 10% than in serving the bottom 90% despite the numbers. Just ask the Brazilians.
Soon 90% of us will be tending to the never-ending needs and wants of the top 10%. We're almost there already.
I wonder if this will be included on the Fidelity commercials that highlight Boomers as the move through live and all the hat's they wore, and all along, there was Fidelity.
How about starting a business that creates and then caters to what will be the new tradition of 'passing down' the family mortgage. Used to be you'd pass down the family jewels, now you pass down the family debt. Might as well go further in debt and have a big Passing Down catered party with a special faux jewel encrusted cozy that holds the cancelled checks and monthly mortgage statements. Maybe start a new line of life-insurance/HELOC that works off the amount of debt owed. The more debt, the better standing you're in because after all, your kids are going to pay it for you.
This is something that was predicted about a year and a half ago by Jim Puplava on Financialsense.com: The Hundred Year Mortgage.
this situation is just sickening, isn't it?
what happened to 30 year fixed, 10 to 20% down, and burning the mortgage paper parties?
Actually it's a great idea and I would finance all my houses with it.
Imagine buying a $50k house in 1976. Today it's probably worth $350k+ and you owe 50k on it. You've paid the bank $90k over the life of the loan and are currently paying $250/month for your mortgage. BFD.
Leverage me into that inflation play every time. Pay the minimum amount with today's valuable dollars and pay it back with depreciated ones. Where do I sign up?
Seriously. You can't go wrong with a mortgage like that as long as we have a Federal Reserve and fractional reserve banking.
You could buy TODAY in PHOENIX and come out ahead.
I was going to sell my kids for cash but why? You never did anything bad to me!
Besides i don't know what their blue book value is!
Especially in Thailand!
M Fox said:"The real snag here is a couple of generations later, the house will be falling apart and they'll still owe the full amount"!
Yes, and they will look at the deed and say" oh yeah, they must have overbid, look, it was purchased in 2005".
SDounds like the 3 generation loan they had in Japan back in the 90's.
Anon 11:21:10 thats the same point I was trying to make(anon 8:49:04)!
Un fucking believable!!!
One thing to remember is the "rules can be changes at any notice" in the fine-prints.
In a near future children + pass it on to them becomes a prerequisite - that is; no children and your inherited house-dept no longer can be paid by interest-only.
so your family never actually owns the house, excellent idea, they just "rent" money from the bank for generations. I thought slavery was illegal in the UK?
watch out - "...They could also pass the mortgage onto a non-family member, such as a friend or even a colleague, if they wanted to."
If the Brits fall for this then they are even stupider than Americans.
Is that even POSSIBLE???!!!
I am not sure what y'all are getting so exercised about. Currently if you inherit an estate which includes a house with a mortgage on it, you have to pay off the mortgage (either with cash or by taking out a new mortgage). With this program the mortgage is transferrable at no cost. Therefore it increases your choices therefor it is a better option than currently exists.
If the mortgage exceeds the value of the property, obviously you say "no thanks" and put the property back to the lender (the estate would be subject to gain on loan forgiveness). Depending on the terms of the mortgage the lender may have a claim against other assets in the estate to make up for the deficit.
In any case, the lender has no claim against the next generation, only against the estate of the decedent.
If your parents choose to borrow money in excess of their assets and live the good life, that's up to them and the lender - there's no law that says they have to pass anything on to their greedy children.
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