Parent-child relay mortgages

How a relay loan works

A parent-child relay mortgage bases the repayment term partly on a younger successor borrower — typically a child — so the loan can run longer than the parent’s age alone would allow. The parent repays initially and the child continues, which can make an intergenerational home purchase or rebuild feasible. It is one way to align a long-lived asset with a two-generation repayment plan.

Estate and family risks

The structure entwines two generations’ finances and estates, so it needs careful planning. Consider who will own the property and in what shares, who occupies it, how the debt and title pass on the parent’s death, whether group credit life insurance covers the right person at the right time, and — often overlooked — fairness among siblings who are not on the loan. A relay loan can be a sound part of inheritance planning, but title, debt, insurance, and sibling fairness require professional advice from a tax accountant and, where appropriate, a lawyer or judicial scrivener.

Key points to carry away: The repayment term is based partly on a younger successor borrower, allowing a longer term; It can support an intergenerational home and repayment plan; Estate, occupancy, ownership, insurance, and sibling-fairness issues need planning; Get professional advice on title, debt, and insurance before committing. Use the linked guides and calculators for the full decision, and confirm anything material with the lender, a licensed broker, a judicial scrivener, or a tax accountant before you act.