The suggestion is that such mortgages will be interest only

And ha ing a longer term or an interest-only mortgage does nothing to urther reduce the costs."Sa ills calculates that a ?200,000 mortgage on a 25-year repayment basis would cost around ?350,754 A ter 25 years the buyer would then be debt- ree. I the property is passed on to the next generation that will not happen, so the total interest bill will continue to mount.Melanie Bien likens the process to renting or an extended period. I they cannot, they will ha e to sell.Another practical problem with the Kent Reliance proposal is that because it is not tied to any method o paying o the mortgage, the home owner is committing to pay interest inde initely, or at least until the property is sold. But as Hollingworth points out, there are other ways to plan or inheritance tax.Also, anyone who inherits a property and a mortgage will presumably still ha e to meet the lender's criteria. E en i the parent is able to meet mortgage repayments into retirement, their o spring might not be able to. As Da id Hollingworth o brokers London & Country points out, this will do nothing to help irst-time buyers. "Most want to step on to the property ladder in their 30s and inheriting a property will usually be much urther down the line." There is also something morbid about waiting or someone else to die be ore stepping on to the property ladder, he adds.Kent Reliance has suggested that the mortgage could bring inheritance tax ad antages to amilies: there will be no tax to pay on the part o the property's alue that is still co ered by the bank, only on any equity.

In others, an interest-only mortgage enables buyers to step up to a better property than they could with a repayment loan, so sa ing on mo ing.But Bien cautions that many borrowers opting or interest-only loans are using other sources o income, such as bonuses, to repay the capital, rather than an open-ended commitment to pay interest.Is there anything in this deal or my children?Most brokers appear to ind it hard to make a case or inheriting a mortgage, especially one that is on an interest-only basis.One problem is that increasing li e expectancies mean that children could be quite old be ore inheriting the property and the loan. Some will be irst-time buyers who need to minimise their monthly payments, but plan to swap to a repayment mortgage in a couple o years. Con entional debts ha e to be repaid on the death o the borrower. The Kent Reliance proposal will allow their amily to take o er the loan, remo ing the need to sell the property.

The suggestion is that such mortgages will be interest only. Why would I want to take out such a long-term loan?Rising house prices mean that a hand ul o lenders can arrange 30-year terms, or terms up to retirement. The idea is that increasing the mortgage term brings down monthly repayments.There are two ca eats, howe er. The irst is that the longer the term, the higher the total interest bill. The second is that a longer mortgage term makes no di erence to the monthly costs o an interest-only mortgage, such as the Kent Reliance are proposing.According to Melanie Bien, associate director at Sa ills Pri ate inance, more homebuyers are opting or interest-only mortgages. One o the stranger ideas or a mortgage has lately emerged: a mortgage that is open-ended, ne er needs to be repaid and can pass to the next generation. The concept is being proposed by the Kent Reliance Building Society, one o the astest-growing small lenders.