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Government considers 50-year mortgages that could be passed down to generations to help deal with housing crisis | UK News

Homeowners could soon be taking out 50-year mortgages that will then be passed on to their children when they die, according to new plans being considered by the government.

The Japanese-style loan agreements could mean that people can buy a home without expecting to complete the mortgage payments in their lifetime.

Instead, the property and outstanding debts would be passed on to their children.

Asked about the programme, Prime Minister Boris Johnson said he was “certainly” considering intergenerational mortgages.

It comes like Mortgage loans fell 36% in April This is another signal that the red-hot housing market is slowly losing momentum.

The idea was floated within government as it could allow people to buy a bigger home than they could otherwise afford.

How long could the mortgages run?

Maturities of 100 years were enacted in Japan, but experts were skeptical about the proposal’s impact on Britain.

The government is already trying to boost homeownership with a package of measures including extending the right to buy to housing association tenants and trying to improve access to 95% mortgages for buyers who are struggling to pay a deposit because of high rent levels save up.

When asked about the mortgage idea during a visit to Madrid this week, the prime minister told reporters: “I think there are a lot more ways to help people with 95 per cent mortgages, there’s a whole range of products now that we have tried encourage.

“But we also want to find all sorts of creative ways to help people become owners.

“Last year we actually had 400,000 first-time buyers, that’s a big number, we’re starting to turn the tide, but it’s critical for this government and for our entire economic story if these numbers continue to be strong.

“We need young people who have the confidence, who have the deposits, who have the mortgage packages, to be able to buy property.”

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The most popular mortgage term among first-time buyers is around 30 to 35 years, but an intergenerational approach could add decades to that.

However, commentators warned that housing supply problems would not be addressed and could push house prices further higher.

Scott Taylor-Barr, financial advisor at Carl Summers Financial Services, said: “I have a feeling Boris Johnson is coming from the wrong direction.

“It’s not the mortgage market that’s keeping people from becoming homeowners; it’s the cost of real estate relative to people’s income.”

Government considers 50-year mortgages that could be passed down to generations to help deal with housing crisis | UK News

Source link Government considers 50-year mortgages that could be passed down to generations to help deal with housing crisis | UK News

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