What happens to my mortgage when I die? What if I don’t have life insurance?
Mortgage loans don’t disappear when you die. That means that loved ones who live in the property will be affected.
There are options, but without payment from a life insurance policy, it could be more difficult.
Any remaining debt will need to be paid by the executor of the will from the estate before being passed on to any beneficiaries. If the debt is too large to pay off with the funds from the estate, then the property may need to be sold.
After you die, the mortgage will still need to be paid. Lenders can still ask for the full sum of the mortgage to be repaid, which would cause the sale of the property to pay off the outstanding balance.
However, lenders will often be understanding and realise that the legal process may take some time. If your relatives or beneficiaries want to keep the property in their name, then they can take over the mortgage following a standard assessment to ensure they can afford to do so.
If this cannot be approved, the house may need to be sold.
If you have a joint mortgage, your partner would need to apply to transfer the mortgage into their name and undergo a mortgage assessment. If they are unable to afford the mortgage on their own, there is the possibility of needing to sell the property.
There are many factors which can affect your mortgage in the event of your death, including the amount of Inheritance Tax that will need to be paid, which is required on estates over £325,000.
Protecting your mortgage with Home of Mortgages
Major events such as loss of a loved one, serious illness, accident, and unemployment can all affect the household income and your ability to pay the bills.
We work with you to establish your protection needs and recommend the most appropriate cover for your needs from the vast amount of protection products available.
As with all insurances – conditions and exclusions apply.
Your home may be repossessed if you do not keep up repayments on your mortgage.