What Happens if One Person Dies On a Joint Mortgage?

Losing a loved one is difficult enough without the financial worries that can follow. The safety of your home is often the biggest challenge you’ll face with uncertainty surrounding what may or may not happen with your mortgage.

By following this guide you’ll have a better understanding of what happens to a joint mortgage when someone dies, the steps you need to take and where you can look for help and guidance.

What happens to a joint mortgage when someone dies?

If the person you share your mortgage with has passed away, it’s important to let your lender know as soon as possible. They will have clear procedures in place and will be understanding if you’re struggling with the circumstances.

You will need to show your mortgage lender a death certificate, which can be taken into a branch or sent to them by post. They will advise you of how quickly they need this when you initially contact them.

Why the mortgage type is important

It’s important to note that there are two types of joint mortgage – beneficial joint tenants and tenants in common. Which one you have will impact what happens if your mortgage partner (we’ll refer to this as ‘partner’ going forward, though this could mean the friend, relative or other person who co-signed your mortgage) has passed away.

The key question that pretty much every surviving partner will have is – what now happens with the outstanding mortgage debt?

At times like these, it can be beneficial speaking with an experienced mortgage broker. They’ll understand what the process is in the event of a joint mortgage holder’s death and be able to offer the right guidance.

Is the mortgage debt automatically cleared?

No, not necessarily. In most cases, you and your partner will have a life policy or other type of insurance that can be used to clear the outstanding mortgage. This will leave you with no debt and a property that you now fully own by yourself.

If you’re the beneficiary of part of your partner’s estate, you may also be able to use other assets your partner might have owned to clear the debt, or any employee benefits they may have been entitled to, such as death in service.

Otherwise, you’ll be responsible for keeping up the monthly repayments on your mortgage.

This can be difficult for a single party, especially when dealing with funeral costs or if they’re faced with paying off a spouse’s unsecured debts too, like bank loans or credit cards.

What happens if you can’t afford to pay?

If you’re unable to cover your mortgage debt, don’t worry. There’s a few options that could be available to you, such as:

Payment holiday

If you’re struggling with repayments in the short term, your mortgage lender may agree to a payment holiday. This puts a hold on mortgage repayments until you’ve decided what to do with the property.

Of course, interest on your mortgage will continue to increase during this time so this shouldn’t be viewed as a long term solution.

Increasing your mortgage term extension

When you take out a mortgage, you usually agree to pay it back over a fixed term of 20, 25 or 35 years. You’re allowed to extend your mortgage term as long as you won’t still be paying it off when you retire (although some lenders can still accept this, if your retirement income can cover the repayments). This will make the monthly repayments smaller. Keep in mind that an increase in the term means you’ll pay more interest overall.

Switching to an interest only mortgage.

While a repayment mortgage helps you pay off the full value of the property in increments, an interest-only mortgage is slightly different. You just pay the interest while you save up to pay off the price of the property once your mortgage term is up, or sell it on.

Switching to an interest only mortgage will reduce your monthly payments, which could be useful, but will also mean you need to find an alternative method for repaying the capital amount when the mortgage term ends.

Remortgaging your property

People remortgage quite often. It just means swapping to a new deal with your current lender or taking out a new mortgage with another lender altogether. It can help you get a better deal and make your repayments more affordable.

You might be able to do this for a number of reasons:

How a broker can help you

Losing a partner can be a traumatic time, and financial uncertainty only adds to this. If you’re worried about being able to afford your mortgage repayments by yourself, speaking to an experienced mortgage broker should be able to make you feel more at ease.

They’ll guide you through all of the options now available to you and help you reach a decision with your best interests in mind.  Our advisor-matching service can quickly assess your needs and pair you with a broker who has the right expertise in this area.

Give us a call on 0808 189 0463 or make an enquiry and we will arrange for an advisor we work with to contact you straight away for a free, no obligation chat.