Understanding The Drawbacks of a Joint Mortgage: Losing Your Partner
Many couples and partners purchase their property together through a joint mortgage. While we never like to think about a person we are close to passing away, it is essential to consider the terms of the mortgage and what will happen should that occur.
In this guide, the Revolution Brokers team explains the options and what is likely to happen if one person on a joint mortgage dies.
For more help with analysing the joint mortgage options, give us a call on 0330 304 3040, or drop a message at [email protected].
What Happens if One Joint Mortgage Holder Dies?
It depends on the terms of the tenancy. If both partners are beneficial joint tenants, then the deceased person's share will automatically pass to the remaining owner.
The challenge then is keeping up with the mortgage payments on a reduced income.
What Problems Occur When One Joint Mortgage Owner Passes Away?
In addition to the grief associated with losing a loved one, a surviving partner on a joint mortgage will need to consider several costs and administrative tasks that can quickly stack up.
That includes:
- Covering funeral costs and taking over any unsecured debts in the name of the deceased person.
- Organising bank accounts, where these are not jointly owned.
- Cancelling or switching direct debits.
- Applying for a death certificate.
One of the best ways to avoid this becoming an even more challenging time is to have a will and life insurance to cover the associated costs.
What Does it Mean to Be Tenants in Common on a Joint Mortgage?
In this scenario, if one partner dies, then their share of the property doesn't automatically go to the surviving owner. Instead, it is passed to the beneficiaries named in their will.
If there is no will, the property is usually divided up according to intestacy rules. Therefore you don't have any control over who inherits your home or your proportion of a shared house.
Is a Surviving Joint Mortgage Owner Liable for 100% of the Debt?
They are, yes. As a joint tenant, you would inherit all of the property and be liable for any mortgage repayments or other debts secured against your home.
If there is a life insurance policy, this will usually cover the mortgage costs and make it possible to remain in the property.
You can also explore alternatives to avoid having to sell your home or risk repossession if you aren’t in a position to cover the mortgage costs and there is no insurance cover in place.
- Lenders will sometimes offer a payment holiday to give you time to make arrangements.
- Extending the mortgage term will reduce the monthly cost.
- Switching from a repayment to an interest-only mortgage may be more affordable.
- You could look at remortgaging deals to find a lower interest rate.
- You can sell the property and use the proceeds to purchase a smaller home.
- If you have an inheritance or an insurance payout, you can use that to pay off some of the mortgage and reduce the remaining repayable debt.
Can I Remortgage a Joint Mortgage When a Partner Dies?
Remortgaging is often a good option if you can find a more attractive interest rate. This means your monthly payments will reduce, and the home remains affordable.
Most lenders will consider a remortgage deal in the situation. Still, it is strongly advisable to seek support from an independent broker who can advise whether you will find a better deal elsewhere.
Lenders will consider remortgage criteria, including:
- How much you earn and how much you can afford to borrow.
- Whether you are in stable, long-term employment.
- Any other debts or costs you need to factor in.
If you have any adverse credit issues, this might throw up an obstacle. Still, a lot depends on when the credit problems occurred, how severe they were, and if you have since settled your debts.
Do I Get Breathing Space to Arrange a Remortgage When a Joint Mortgage Holder Dies?
In most cases, lenders will be sympathetic when a client has suffered a bereavement. You will need to get in touch with them, and most will offer a repayment holiday or stop any repossession proceedings until you have had time to make arrangements.
Professional Help with Joint Mortgage Refinancing
If you find yourself in the situation, it can be extremely tough to juggle the costs, options, and debts alongside being able to grieve.
Our mortgage advisors is an expert team dealing with refinancing for thousands of people across the UK. Give us a call on 0330 304 3040, or drop a message to [email protected], and we'll help you find the best solution, with our consultants on hand to help each step of the way.
