Perpetual debt: the mortgage that devours your heirs

Perpetual debt: pay less now and let your children foot the bill

Imagine your monthly mortgage payment dropping from 900 to 300 euros. It seems like relief, but you are not paying down a single cent. Your heirs, however, will assume the full debt when you die. This is what is being called "perpetual debt," a formula gaining traction in the United States and already showing parallels in Spain through mortgage payment holidays.

How does this product work?

The mechanism is simple: the bank allows the borrower to pay only the interest or a reduced payment (a third of the standard amount, according to circulating examples) for an indefinite period. The principal does not shrink. If the borrower cancels the arrangement, payments return to the original amount. But if they die, the debt falls to the heirs, who must either pay it or lose the property. Some see it as "cheap eternal rent"; others, as a generational time bomb.

Comparison with the reverse mortgage

A reverse mortgage lets older homeowners receive income in exchange for their property, but the debt grows until it consumes the entire asset. With perpetual debt, the owner receives no income; they only ease their monthly payment. "The reverse mortgage is worse, because the locust devours a home that was paid for little by little," the argument goes. But in both cases, the heirs come out losing.

The sarracena debate: selfishness or survival?

Some argue that everyone should manage their own assets without thinking of their heirs, who can always refuse the inheritance. As the popular saying goes: "Spend your money well, even if your heir goes hungry." Others point out that this is a way of passing poor financial management on to the next generation. The underlying question is whether such products should be more strictly regulated to prevent the debt from becoming an inherited burden.

With interest rates still high and housing prices climbing relentlessly, perpetual debt emerges as a patch for those who cannot pay. But is it a solution or a generational trap?