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Joint Mortgages when one person dies

Find out what happens if you have a joint mortgage and one of you dies

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By Pete Mugleston   Mortgage Advisor

Last updated: 6th February 2019 *

What happens if you have a joint mortgage and one of you dies?

The thought of a loved one passing away is not something that many people want to think about, but unfortunately it does happen, leaving loved ones to cope with the financial weight of paying for a joint mortgage alone especially if their insurance doesn’t include mortgage payments or life cover.

If, like the many people who contact us every week, you’re wondering what happens when a joint mortgage holder dies, we’re here to help.

The advisors we work with are experienced in this specific area and have the knowledge and understanding needed to assist you.

To help you through the process, we’ve listed everything you’ll need to know about joint mortgages and what to do in the event that a partner dies.

  • What is a joint mortgage?
  • If you have a joint mortgage and one person dies what happens?
  • What is a Tenants in Common mortgage?
  • What happens if we have a of a Tenants in Common mortgage?
  • What happens if there is an outstanding mortgage debt on a joint mortgage?
  • Am I liable to pay any mortgage debt?
  • How does the surviving person pay for the joint mortgage alone?
  • How to remortgage after the death of one party on a joint mortgage
  • Will bad credit affect my remortgage application?
  • Should I get insurance for my joint mortgage?
  • Where can I get advice?
  • Speak to a joint mortgage expert

What is a joint mortgage?

A joint mortgage can allow up to four people to purchase a property together. Of course, in most cases, it is just two people that apply for a joint mortgage however, every individual that is named on the mortgage is responsible for making repayments in full, every month.  When people apply for a joint mortgage, they can decide how they want to share the equity in the property with a joint mortgage agreement.

Usually long term or married couples decide to own the property equally as joint tenants. This ensures all the borrowers are legally seen as one owner, and therefore in the case of a joint mortgage application, have the same rights to the property.

If you have a joint mortgage and one person dies what happens?

If the partners in the mortgage were beneficial joint tenants at the time of the death of the joint mortgage holder, when the first partner dies, the surviving partner will inherit the other partner's share of the property. This would also leave them solely responsible for the remaining mortgage repayments, if there are any.

What other problems would the surviving partner face?

Sorting out the mortgage is just one problem facing the surviving partner. There are a number of issues to deal with including –

  • Organising a death certificate
  • Funeral costs
  • Bank accounts
  • Joint bank accounts are not frozen, so can be accessed.
  • The surviving partner may not be able to access the bank accounts of the deceased until after probate.
  • Direct debits (power, gas, phone etc) may be affected.
  • Unsecured debts in the name of the deceased (personal loans, credit cards etc)

As you can see, a current will and suitable insurance can remove a lot of the burden from the surviving partner.

The advisors we work with are experts and can give you the right advice when it comes to insurance cover and will explain to you the very important difference between Private Mortgage Insurance, and Mortgage Protection Insurance. We go into more detail later in this article.

What is a Tenants in Common mortgage?

We have also helped many homeowners who have what’s known as a tenants in common mortgage, which allows two people to take out a mortgage but own separate shares of the property.

This type of mortgage is usually taken out by family members or friends but there are cases of partners taking out this type of mortgage too.

What happens if we have a Tenants in Common mortgage and one partner dies?

If one of the share owners of the tenants in common mortgage passes away, their share will pass to their heirs through a will rather than to the surviving tenants.

That’s why it is crucial to write a will in the event of your death as if there isn’t one, any property would be shared out according to the rules of intestacy. This could result in your share of the property being left to someone you might not want it to be given to.

What happens if there is an outstanding mortgage debt on a joint mortgage?

It is often the unfortunate case that after the death of a joint mortgage holder, there is an outstanding mortgage on the house.

As well as dealing with the loss of a partner, this can leave many people feeling shocked and worried about what will happen to their home.

Am I liable to pay any mortgage debt?

If you owned the property under ‘joint tenancy’, you’ll inherit the property outright which means that you’ll also inherit any debt, such as mortgage repayments.

Many people don’t realise that when they inherit a property through either a joint mortgage or a tenancy in common, that the deceased’s debts still need to be paid.

What happens to the property if I can’t afford to pay the outstanding mortgage debt?

In some cases, there is a life policy or form of other insurance which could pay out and cover the mortgage debt. If there is no such cover, this could leave the remaining person with a large and unaffordable debt.

If they are unable to pay the deficit through remortgaging or other forms of finance, the house could eventually have to be sold to cover the debt or be repossessed.

This is why you need to get the right advice as quickly as possible, so talk to one of the expert advisors we work with today.

How does the surviving person pay for a joint mortgage after the death of one party?

If a partner has died and you are facing the worrying prospect of paying off your joint mortgage alone, you may be wondering what your options are, especially if they were the main breadwinner.

Many would struggle with the financial weight of paying a joint mortgage alone, but there are some options that could help reduce the monthly payments to make the mortgage more affordable.

  • A payment holiday could give you some breathing space
  • Increase the term extension of the mortgage to bring the monthly payments down
  • Change the mortgage from a repayment mortgage to interest only
  • Remortgage to find a lender with a better interest rate to reduce payments
  • Sell and downsize to a more affordable property
  • Pay off a chunk of the mortgage with cash from insurance/employer death in service benefit

How to remortgage on a joint mortgage after the death of one party

It can be really daunting to be left with such a substantial debt. If you decide that you need to remortgage in order to find a better interest rate to make your mortgage payments more affordable, your first port of call is your existing lender as they should be more flexible.

If this lender isn’t able to help (for instance affordability or credit issues etc.) then there may be other options based on:

  • Your affordability - they may use a mortgage calculator to determine whether you can afford a mortgage alone
  • Your employment - they may look at how much you earn in salaries and bonuses
  • Self-employed - they will want to know how long you have been self-employed and  whether your income is reliable or not. They may require your books to determine this
  • Any benefits, pension, insurance pay-outs that you have or are expecting to receive in the future

Will bad credit affect my remortgage application?

Visit our bad credit pages for more specific information on mortgages with credit issues

For applicants with bad credit, applying for a remortgage alone can be daunting. Lenders have a duty to lend responsibly but they will also be understanding of your circumstances.

High Street lenders and banks do have more stringent rules for lending to applicants with bad credit but there are lenders who will take other factors into consideration including:

  • The severity of the debt
  • The date the issue was registered
  • If the debt is settled

What would a lender consider as bad credit?

Bad credit or ‘adverse credit’ is a term used to describe a less-than-perfect record of repaying credit commitments. If you have adverse credit it could mean that you have negative payment information on your credit report. Examples of this include low credit score, late payments, defaults, CCJs, right up to bankruptcy and repossessions.

The good news is there are specialists out there who can help, with lenders consider all manner of different scenarios.

The best approach is to get help from someone knowledgeable about adverse credit and remortgaging from a joint mortgage after death. It can also be really helpful to check your credit history so you’re aware of any financial issues you may have on your report before you apply.

If you’re worried about adverse credit or just need some help with what to do next, one of our advisors can talk you through it and offer you on either checkmyfile, credit monitor (call credit) and Experian.

How long will a lender give me to pay off any outstanding mortgage debt or arrange a remortgage?

Lenders have a duty to their customers and should always treat you fairly and be sympathetic about bereavement. Because of this, you may be able to put a hold on repayments and delay repossession until you have been able to decide what you want to do with the property.

This is also known as a “payment holiday” so if you are having trouble with dealing with the organisation of refinancing or just need some time to think about your options whilst you grieve, ask your mortgage provider about this.

Where can I get advice?

It’s really important to get the right advice when it comes to getting the best insurance for your circumstances because you’ll want to make sure that in the event of a death or illness of either you or your spouse, that the joint mortgage and your loved ones are covered.

The advisors that we work with are trained experts and have a wealth of knowledge about joint mortgages and the problems that may arise when a loved one passes. They can provide you with confidential and non-judgemental advice with any of the following:

  • What to do next after the death of a partner on your joint mortgage
  • Getting the best and most suitable insurance to cover you for the future
  • Remortgaging your property in the event that a loved one or partner has died
  • Any other queries you have regarding your mortgage

A mortgage advisor will dedicate their time to listen and then research the best solutions for you based on your circumstances. They can also can assist you through the process of remortgaging and finding you the most affordable rates, so if you need help with a joint mortgage after one person dies, contact us today.

Speak to a mortgage expert today

Call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here. Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t change a fee and there’s no obligation or marks on your credit rating.

Updated: 6th February 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.