50 year mortgages - next gov scheme to prop up prices

[413x]

Guardian link

Seemed like this was inevitable. But I can't understand how it can work?

Usually you get 3 generations alive at once and for most 2 will be needing separate housing simultaneously.

Therefore how does a parent pass this mortgage down? Thier kids would ideally already be owning with mortgage by time the mortgage is passed?

I can't even wrap my head around how this would work vs typical inheritance? Unless there's some inheritance tax break etc?


If someone can explain how this is of ANY benefit. Let me know!


I suspect in theory you'd just die not completing your ownership. So effectively it's not multi generational. It just allows you to borrow more and never pay it off?

 

[413x]

I guess that's kind of the point - it's unlikely kids would be getting a mortgage unless they're in good jobs.

The benefit seems obvious - to help people onto the property ladder in whatever way possible.

Tbh I'm not surprised, I've been saying for months on these type of threads that I imagine we'll be seeing lifetime mortgages soon. It doesn't matter what the balance is when you die - the point is that the property would get sold, the bank takes however much is owed and the family get whatever remains.

Thought as much.
It's not really multi generational. More a beyond your work life mortgage.


This could really prop up house prices. All of a sudden you're allowed to plan to not pay off a mortgage from the start.
The question "at what age do you plan to retire?" vanishes.

 

[413x]

It's not quite like that though is it. Matter of fact that if you don't pay off your mortgage in your lifetime then the bank will take what is owed. No different to a repossession.

If people can't afford to pay it off in their lifetimes - or don't have descendants that would inherit then why would they be bothered if the mortgage was never paid off.

I'm guessing in reality a lot of thier kids would already have another 50 year mortgage started. So the product won't be passed on.

The kids will organise selling the house. The bank will be paid off (along with substantial exit fees) and the equity will be split via a will as what would happen today

 

[413x]

It is indeed mental, or to be specific “rent”

It's a half way house (lol) between rent and own.

But it only kicks the can down the road.

 

[413x]

It's interesting you say that. There is still wealth in this country. A young couple both in professional jobs are likely to have an income of 70-90k by the time they're in their 30s. With a 10% deposit that should buy them a house in the 300-400k range.

It becomes impossible for a couple both on minimum wage (~42k household income). It becomes problematic for a couple both on an average wage (~62k household income). So it's the lower end of the market that gets priced out of home ownership and subjected to a life of rent. But there's plenty of young graduates in professional jobs who should still be able to afford to get on the ladder.

I'd agree with this.

We've only just started earning above average. (70k between us, and we both WFH now)
It was a slog saving for the house in 2020 with 52k.
And most of the saving was done on even less.

We've both upped our salaries AFTER getting the house. It was a grind before. Unfortunately for anyone not quite there, that bar jumped massively last 2 years. To get an equivalent house to what we got you'd probably need 65k vs our 52. Absolutely brutal and basically **** for anyone chasing.


Being in that average pay band is tough. You know you should be able to afford a house so you save and save.

We also had the advantage of no debts or kids.
But its getting harder all the time. I feel for anyone chasing it near average wage.

On 70k, yes. Definitely achievable. If you really live cheap, in an average area you can probably save 2000+ per month on 70k

 

[413x]

The biggest problem with trying to save is that so much income is normally already spent on paying the very high cost of rent these days

In our last stint we got the cheapest place we could find. It was 450ish a month for a 1 bed upper floor of a split house. It was absolutely horrible. Did a year in that. I think that would be 550+ now. But it was a dive.

Never have gone from something so **** to something really nice. Had to keep telling ourselves.. Only a few more months

 

[413x]

I think this is definitely a key point. So many people want some form of luxury which really stunts how much they can save. And before some people say not everyone can afford to save even with the cheapest rent - that just echo's my point from my previous post, the housing market is moving to the point of being unaffordable unless you're earning above average wages.

Ive lived in some dives to save on rent. Is it worth it? Not sure. One house seemed "damp" and that does affect health. But never would I rent in luxury. My newly single friend wants an inner city rental. So is probably paying 200 more than he could elsewhere. No issue with that as I don't know his goals but seems a waste to me.


It is. Average gets you noticeable less. Especially the last 2 years. Probably lost at least a bedroom. It's unsustainable. And that unsustainabiility might be about to play out

 

[413x]

The country is bankrupt, this is just another way of trying to hide the enormous debt that the country is in.

Look at this table and sort the column marked NIIP, note the debtors and creditors.

Net international investment position - Wikipedia

en.wikipedia.org

Before Blair got into office the UK was a net creditor, he and Brown went on an enormous spending spree and your great grand children will be stll paying for it.

Can't afford kids!

 

[413x]

completely normal in many countries. My mortgage would be about 80 years and i will long be dead getting this mortgage at 39.

What is the big fuss? You pay your mortgage monthly until you sell the house or you die. When your family has left home you can downsize reducing mortgage, or perhaps when you retire. When you and your partner die then your children inherit the property and the outstanding mortgage. It is extremely unlikely your children will want the house and in any case with multiple children it because difficult to properly divide the assets. So your kids have the house sold and the estate divided. Nothing stops a child taking over the mortgage if that is what they want, and they meet the affordability requirements.

I think it's mainly because this is only being introduced to prop house prices up.
It's yet more burden on the next generation.

It's creating a house of cards where house prices are being artificially propped up again and again.

The next FTB has a harder job than the one before. As a few said it's a tend towards interest only mortgages where you have all the burdens of a house but none of the benefits.

It's a bodge job on something that needs fixing

 

[413x]

If its cheaper than renting (including house costs) a near interest only that isn't costly to get out of is not a bad thing for the individual.
I myself have benefited from LISA. and have lowered my term as my earnings went up

I do think they are being helped up. But I suppose even the concept of a mortgage can be seen as a prop up.

I suppose with capitalism and everything having a price it was/is inevitable for richer people to buy housing to rent out whatever the price.




I do strongly feel that the every growing wealth divide we are creating needs addressing soon.

With dwindling state support, shrinking of personal assets and generally costs up across the board we are heading into a bleak future where state pensions are firstly means tested. Then gone.
Same with NHS too.

This is fine if you can build up capital to use to support yourself. But this is obviously declining too.


Particularly for any kids now.. I don't want to think about how little support there might be in thier later years without side radical change

 

[413x]

Without doing the numbers, I'd imagine it would be cheaper to have a lifetime mortgage (even if it never gets paid off) versus a life of private rent.

It also gives a massive benefit to one thing renters want more than anything - security. It means there's no threat of eviction if the LL decides they want to sell the house. They're no longer reliant on a LL to fix/repair issues.



You do know that the wealth divide will never be addressed? It's just never going to happen.

Regarding the other points, I'd echo my earlier reply. If anything this should be a good motivator for kids to get a good education and land in a good job, because if they don't do that then they're looking at a very bleak future with dwindling state support as you've mentioned.

I know. I know it won't be addressed. Same way as I don't think we'll get on top of the climate crisis.
Maybe I'll watch district 9 and get a nice reminder of the future!

I am morbidly curious as to how it will play out.
Will there be a snap? Will the volume of the "have nots" get so large there's some sort of overthrow?
Or will it (most likely) just continue until the majority people are just effectively a commodity for the rich to toy with? Even more obvious than it is now.

 

[413x]

I think that's how it would play out if it were a film.

Realistically the wealth system isn't as divided / black or white as the media makes out. There's a definite inequality when 10% own nearly half of all wealth.

But it's the bit between the top 10% and bottom 10% where the majority of people fall. (To fall in the bottom 10% means you'd have assets of less than 15.5k). Most people in this region will be able to get by, so they're not likely to go out rioting etc.

The middle region may well get smaller, i.e. you may need 50k of assets to be within that region, but it's still likely to make up the majority of the population.

Yeah I don't see anything like riots happening near term. Too many on the "gravy train " that also probably don't want it drailed.
Who wants a crash when you're on it?


I guess those on the train will likely dwindle quickly with the cost of living, rising inflation, rising rates and most important... If the jobs market suffers.

But still not likely enough to want to derail it.

The new mortgage rules I guess allow more to join the train. More people on the train the less likely the population want it derailed.

It's snowpiercer!
Off the train is ****
On the train is nice.
But the tracks are falling apart.
Even on the train is there's a clear class system.