New mortgages 50year and passed onto children

[Welshbeef]

https://www.thesun.co.uk/news/19066956/major-chang...

This is an interesting change to the mortgage market.

So as far as I can gather age is now irrelevant for the applicant, but how can the banks stress test “the children” for the years after the applicants normal mortality?

If this is merely to help poorer people buy a property does this really work? Is it the right solution/ should everyone be able to buy?
Will this also mean that everyone’s borrowing ability is much higher so say you could only afford to get a £1m pad once this goes live you’ve at least double the duration to pay it off so could that £1m push up towards £2m?

Could it mean more and more people aim to buy their forever home as their first home/less moves / impact removals business/ estate agents & also Mortgage brokers as once in why would you move?

Open discussion on all pros cons or indifference - is this a weze to hold property prices up?

[Pit Pony]

I'm.sure It will have an impact.

24 years ago, I moved house. For work reasons. To a slightly more expensive region.

Having already paid a 25 year mortgage for 8 years, I bought a house with a 17 year mortgage and the same monthly payment.

We had to compromise on what we could afford, and then we over paid so ended up paying it off in 14 years.

Looking back, if we had decided to go for say 30 years, and a slightly higher monthly figure, we wouldn't be looking at our house and saying, "well if you want a big kitchen and I want a double garage, we will have to move"

[Pistom]

I see this as yet another move which will prop up house prices, put people into greater debt and will make it even harder for many to "own" their home resulting in most paying a lifetime of mortgage payments.

It will be sold to us plebs on the basis of lower monthlies, greater affordability and better access to limited housing stock.

[LimaDelta]

Aren't 50-100 year mortgages popular in Germany, or am I misremembering something?

[cossy400]

What happens if a couple but a house and then find out they cannot have kids dues to what ever reasons.


They have gone in to it knowing the only way they can afford it is, but now have no kids to pay?

What if they kids are feral and dont want to work?

KIds with disabilities who cannot work, are they going to take there benefits off them?


Another bail out scheme in coming.

[dingg]

100 yr mortgages are a thing in Japan.

[2 GKC]

Won’t make any difference to the amount people can borrow.

[hotchy]

cossy400 said:

What happens if a couple but a house and then find out they cannot have kids dues to what ever reasons.


They have gone in to it knowing the only way they can afford it is, but now have no kids to pay?

What if they kids are feral and dont want to work?

KIds with disabilities who cannot work, are they going to take there benefits off them?


Another bail out scheme in coming.

Then the bank wins as in 40 years time that 400k+ house with a small mortgage is probably worth a few million. No payment, the bank reposes.

[Welshbeef]

2 GKC said:

Won’t make any difference to the amount people can borrow.

This to me doesn’t make sense.
Longer the term more you can afford

[2 GKC]

Welshbeef said:

This to me doesn’t make sense.
Longer the term more you can afford

Most residential mortgages are approved based on earnings multiples, which are unlikely to change. Plus in the early years of a mortgage you’re mostly paying interest, which will be substantially higher if you borrow £2m rather than £1m in your example.
It will only make mortgages more affordable if you borrow the same amount.

[Welshbeef]

2 GKC said:

Welshbeef said:

This to me doesn’t make sense.
Longer the term more you can afford

Most residential mortgages are approved based on earnings multiples, which are unlikely to change. Plus in the early years of a mortgage you’re mostly paying interest, which will be substantially higher if you borrow £2m rather than £1m in your example.
It will only make mortgages more affordable if you borrow the same amount.

Let’s take an example £300k @2% monthlies over 25 years would be c£1.5k interest would be £500 capital £1k

[m3jappa]

Its bloody sad really. Loading debt onto your children before they even understand what money even is.

Yes they will probably have debt anyway once they grow up but with any luck they will understand the implications of it and be able to borrow what they can afford.

What a mess the world has become

[Paul_M3]

m3jappa said:

Its bloody sad really. Loading debt onto your children before they even understand what money even is.

Yes they will probably have debt anyway once they grow up but with any luck they will understand the implications of it and be able to borrow what they can afford.

What a mess the world has become

You're not loading debt onto them surely? They become the owners of the house, which is almost certainly worth much more than the outstanding debt on the mortgage at that point. They can either keep the house and continue paying the mortgage if they want to, OR sell the house, pay off the mortgage and keep the balance.

Either way, you're only making them better off. Or am I missing something?

[m3jappa]

Paul_M3 said:

You're not loading debt onto them surely? They become the owners of the house, which is almost certainly worth much more than the outstanding debt on the mortgage at that point. They can either keep the house and continue paying the mortgage if they want to, OR sell the house, pay off the mortgage and keep the balance.

Either way, you're only making them better off. Or am I missing something?

I hadn't thought of it that way tbh.

I suppose it also saves inheritance tax, theoretically it could be planned that the kids only have a few years left of low payments perhaps (although im sure there would be a clause that if they sell in x amount of time its taxed at x% )

Although does it cancel the ability of elderly people to downsize? would the parents still be paying the mortgage when they are 80?

[Welshbeef]

Actually how does this possibly work with IHT or CGT

[55palfers]

Interesting scenario of you have to go into a care home.

No paid for house to sell.

[2 GKC]

Welshbeef said:

Actually how does this possibly work with IHT or CGT

The same way all mortgages do.

[Welshbeef]

2 GKC said:

Welshbeef said:

Actually how does this possibly work with IHT or CGT

The same way all mortgages do.

This new offering is different.
Old mortgages need to be paid by the estate.
New offering kids take over paying it - so this is different but in reality with OHT/CGT why would it be desirable to do so?

[2 GKC]

Welshbeef said:

This new offering is different.
Old mortgages need to be paid by the estate.
New offering kids take over paying it - so this is different but in reality with OHT/CGT why would it be desirable to do so?

CGT unlikely to be relevant? It will be on primary residence which is exempt.
Loan will be deducted from value of estate for IHT whether repaid or not

[deckster]

Paul_M3 said:

You're not loading debt onto them surely? They become the owners of the house, which is almost certainly worth much more than the outstanding debt on the mortgage at that point.

To an extent. You are assuming that house price growth will continue to be strong - which is, probably, a good bet. But it's not a good thing for the country as a whole.

It's a bit of a self-fulfilling policy though as the main effect of enabling people to buy more expensive houses, is to make houses more expensive (see also, help-to-buy as a great way to push up the prices of starter homes).

At the end of the day all of these are all short-sighted policies that don't address the fundamental issue that demographics are changing and to accommodate that we need more properties. A lot more.