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Managing A Mortgage After Death

Coping with a death has pressures of its own but the added responsibilities that come with it can make it even more difficult. Things such as managing a mortgage after death, bill payments and debts, for example, are all expenses that still have to be paid. If you have suffered a loss in the family or a loved one and are trying to determine what options you have available, Spring can offer their expertise and assistance. For years, our experienced team has been able to provide solutions for customers who are in need of some form of guidance when faced with a property they are now financially responsible for. Below, we want to give you all of the information you may need if you find yourself in this sort of situation.

Taking responsibility for a mortgage after death

First steps

The most important step when a loved one passes away is to get in touch with their mortgage lender to make them aware of your situation. While this may seem like the last thing you want to do, the earlier you inform them of your situation the better. They can provide information on who is responsible for your mortgage after the death of a spouse, partner or loved one, and could also provide you with some leniency with payments, giving you some much needed breathing space in order to sort out your financial affairs. This will not be a rare occurrence for them; they will have plenty of experience when it comes to managing a mortgage of someone who has recently passed away so they may be able to offer some sense of guidance and planning.

Who is responsible for managing debts after death?

When a loved one dies, their financial debts (including their mortgage) need to be settled. If they had a will, then the executor of the will can use the assets to pay off any outstanding balance. If there are not enough assets to clear the debts, the property can either be sold, or if the property is inherited, you can take on the monthly mortgage payments yourself if the mortgage lender approves you. There is a chance that you may not be held personally liable for the debts however there are certain responsibilities that come with being the executor of anyone’s estate.

Mortgages after death

As we mentioned previously, notify the lender of your situation as soon as possible and you may be allowed a grace period.  Even after a death, mortgage lenders are still legally allowed to demand the full payment. They also reserve the right to force a sale of the property if the full payment is unlikely. This, however, is only in extreme cases. Most lenders are highly experienced and very sympathetic with bereavement ceases and understand that a little time may be required. This is where talking early can open good channels of communication and allow you the time you need to come to terms with what has happened. If your wish is to keep the property in your name, you will need to apply for a standard mortgage application. This would be the same type of application as you would complete when purchasing any other property, so you would need to get all your paperwork and documentation arranged. If your request for a mortgage is denied, you may need to sell the property to be able to clear all the outstanding debts.

Joint mortgage and death

Having a joint mortgage with a partner or spouse, can add some unfortunate complications in the event of a death. The property does not instantly transfer over to the other name; sadly it is not that simple. If you owned the property under a ‘joint tenancy’, you would inherit all of the property and be responsible for all its associated costs, including the mortgage payments. You will need to apply for a mortgage application in your own name. This is where having life insurance attached to your mortgage is invaluable. Without it, you could leave your partner with nothing and, as a result, have to sell the house. If you owned the property as a ‘tenant in common’, the deceased’s share of the property will be left to an individual named in their will. If the person is the partner or spouse of the deceased, then they will own the house outright. If the deceased’s share is left to someone else, the other person may decide to sell the property to clear any outstanding debts.  If there is no will, this is when probate will need to be applied for and more information can be found on the government website, or you can read our Guide To Selling an Inherited or Probate Property here.

Selling a property after death

If you reach the decision to sell a property following the death of a loved one, Spring’s home buying service can provide a solution that will allow the sale of the property to go through quickly, simply and easily. Dealing with a property sale, even at the best of times, can be very stressful and emotional, Spring, however, are experts in removing the stresses associated with it, giving you the time you need to concentrate on coming to terms with your loss. Even if you decide not to sell your property to Spring, it is still important you get the help and support you need at this difficult time. There are many organizations and charities within the UK that offer free advice to guide you through the steps you need to take following the death of a loved one - a good place to start is the Citizens Advice Bureau or seek the help of an independent financial advisor.

FAQs

Who is the executor of a will?

If there is a will, the executor/s would normally be named in the will and they have a legal responsibility for dealing with the estate of the person who has died.

Will I be able to defer mortgage payments after a death?

Mortgage lenders and financial institutions are well versed in dealing with the death of a loved one and will usually be sympathetic to your situation. Advising any mortgage lender as soon as possible following a death is the best way to open channels of communication and get the breathing space you may need. Many lenders will grant extra time to get finances in place – so get in touch with lenders as soon as possible.

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