When your spouse passes away, it can be a confusing and difficult time.
For many, it raises questions about what happens with the mortgage.
Even during such a traumatic period, you may need to jump into action to get this sorted.
Read on to learn what happens to a mortgage after the death of a spouse.
Mortgage status when a spouse passes away
If you had a joint mortgage, you become solely responsible for repayments.
This triggers a conversation with your lender about affordability.
If only your spouse were on the mortgage, you must pay it off, or take a new one in your name.
Nothing would change if it were only your name on the mortgage. You will continue to make payments on it, as before.
If your spouse was giving money to help with this, even unofficially, then it’s up to you to decide whether you can afford it without them.
Are homeowners forced to remortgage when a spouse passes away
Not necessarily. You won’t be forced if you can afford to meet your mortgage repayments by your lender’s criteria.
A life insurance payout may help with this.
Unfortunately, it’s not your decision whether you can afford it. Your lender makes the final judgment on how much you can borrow.
Even if you disagree, you may struggle to get the decision overturned.
A lender can request that you remortgage your property. If you do so, you’ll often be allowed to live there.
If you refuse, they can force you to sell it.
You should have an open conversation with your bank. Both parties want a solution that works for everyone.
Is inheritance tax due when partners die
It depends on how it is transferred to you.
If the house was owned as a Joint Mortgage or Tenancy in Common and is now wholly owned by you, then no. There won’t be any inheritance tax for you to pay.
On the other hand, if you do not own the house before your loved one passes – and it is transferred to you through a will – then Inheritance Tax may be due.
You should speak to a solicitor or accountant for guidance on your situation.
Am I forced to sell the house when a spouse dies?
Not necessarily. Your lender will decide whether you can afford to repay yourself.
They may also demand that you remortgage. Or they can ask you to find someone to move in with you to contribute.
If none of the above works, they can order you to sell.
If you disagree, you’ll need to take this to court, which may require an in-depth payment plan showing you can afford it.
A solicitor can advise on whether you’re likely to be successful.
Can I use a Life Insurance payout to pay off my mortgage?
Yes. You can use a life insurance payout to help pay off your mortgage.
Even if it doesn’t cover the full amount, you can remortgage.
What happens if we are unmarried, and my name is not on the mortgage?
The rules of intestacy kick in at the start of the probate process.
Even if you lived together, you may not have any legal claim if you weren’t married and didn’t have your name on the mortgage.
This means that you may be unable to sell the property, make changes to it, or live in it without the legal owner’s permission.
The situation could be out of your control.
The laws of intestacy state that the house will pass over to the deceased person’s children if there is no Will.
The following recipients would be Grandparents, nephews, and nieces.
