Death of a loved one is difficult. Then trying to get your head around the financial side of things such as their mortgage can make it even more complicated.
We have published this post to help you understand how the mortgage may be handled following the death of a loved one.
If you’re not yet at a stage where you need to address the mortgage, then we suggest getting some help with the legal aspects first, either from a solicitor or an organisation like the Citizen’s Advice Bureau.
Who pays for debts after death?
When a loved one dies, their existing debts including a mortgage won’t disappear with them. They still have to be paid by the executor out of the estate before any of their savings are passed on to the named beneficiaries in the will. If the balance outstanding is too much to be paid off with other assets from the estate, then the house may need to be sold to pay off the debt. You’re best letting your loved one’s mortgage lender know about their death as soon as possible.
Who pays the mortgage after death?
Normally after death of a mortgage holder, the lender will still require the monthly payments. Lenders legally can demand the full amount of the mortgage be repaid and hold the right to ‘force’ the sale of a property to reclaim any outstanding balance, even though in most cases lenders will be sympathetic and that the legal process can take time to sort. If you want the property to remain in your name, then you will need to run through a standard mortgage assessment to confirm you are able to afford to take over the mortgage payments.
Who pays for the joint mortgage after death?
If you and your partner take out a joint mortgage, you are both jointly and severally liable for the repayments. With the passing of your partner or spouse, the property will not automatically get transferred to you regardless of any will if there is a mortgage on the property. To be able to transfer the mortgage and the property into sole ownership the survivor would need to apply for and must be able to afford the mortgage.