What happens to my house and mortgage if I die?

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When you own a mortgaged property, it’s vitally important to make sure your home or its net sale proceeds pass to your dependants - typically your spouse, civil or common-law partner or children.

However, without making a Will or having the means to pay off your mortgage when you die, you could jeopardise any planned inheritance for your beneficiary/ies or worse still, make your family homeless.

Here’s what you need to know about what could happen to your home or mortgage when you die, and measures you should put in place to protect your loved ones.

What happens when you die?

What happens when you die will depend on whether you’ve written a Will or if you die without a Will (intestate).

When you die with a Will

If you die leaving a Will appointing executors, it is your executors’ responsibility to collate and document all your assets and money, including any property, due to your estate.

At a later date, once any debts have been settled, your property sold, and Probate granted or inheritance tax paid (if necessary), your executors will then distribute the net proceeds from your estate in accordance with your wishes and what’s written in your Will.

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Read more: Choosing an executor for your Will

When you die without a Will (intestate)

If you die intestate without writing a Will then it is typically your next of kin such as a spouse or child who will oversee dealing with your property and finances.

Inheritance laws were simplified in 2014 so that the intestate process is less complex and more straightforward for:

  • when someone dies intestate with no children - their entire estate will pass to their spouse or civil partner (this does not include a common-law partner that you have lived with for a long time - you need to make a Will for this to happen)
  • when someone dies intestate with children or adopted children - their estate is split between their spouse or civil partner and their children

Read more: What happens if you die intestate in the UK?

What happens to my house if I die?

What happens to your property when you die will depend on whether:

  • you have made a Will
  • you have a mortgage
  • you rent a property
  • the property is jointly or partly owned

What happens to my house if I die without a Will?

If you die intestate and solely own a property, the rules of intestacy apply and your spouse or civil partner together with any children you may have (including adopted children) will inherit your property. If you’re divorced or a civil partnership has been legally ended then an ex-partner will not inherit.

If you die intestate and own the property as a joint tenant, your 50% share will automatically pass to the other surviving joint owner.

Will writing ensures your loved ones’ inheritance isn’t left to chance and can avoid harrowing scenarios like your share in a jointly owned property automatically passing to an ex-partner, you have not yet legally divorced, instead of your children.

Making a Will online with Wills.Services is quick, cheap and easy, but also completely professional. Our Will writing services cost as little as £29.99 for a standard legally binding Will.

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You might like: What happens to your digital assets when you die?

What happens to your mortgage when you die?

If you have dependants (a spouse or children that rely on you financially), you should ideally take out a life insurance policy to pay off your mortgage when you die to make sure your home doesn’t need to be sold.

If your property is still mortgaged when you die, your beneficiary/ies will not only inherit your property (or your share in it), they will also inherit your mortgage debt.

In these circumstances, your dependants/beneficiaries could apply to your mortgage lender to take on the mortgage and repayments. However, if the mortgage lender declines their application or your dependants don’t want to take the mortgage on, the property will then be put on the market for sale.

Once the property is sold, the sale proceeds will be used to pay off the mortgage and any net sale proceeds, after settlement of any other debts you may have, will eventually pass to your beneficiary/ies in accordance with your wishes as set out in your Will.

If you haven’t made a Will, the rules of intestacy apply as outlined above.

Make a Will

You might like: 6 Things to consider when making a Will

What happens to your rental property when you die?

When you die, a tenancy doesn’t automatically end and, just like an owned property can, a rental property will form part of your estate.

The executors of your Will or if you didn’t make a Will, the administrator, will continue to be liable for the rent until the tenancy officially ends.

If you did not write a Will and no one takes over the role of administrator for your estate when you die the tenancy will be temporarily transferred to the Public Trustee.

Most landlords will allow the deceased’s executors or administrators to surrender the tenancy and be released from their obligations under it.

If you share the rental property with a spouse or civil partner when you die they will have the right of succession (known as the ‘right of survivorship’) to take over the tenancy, whether or not they are named in the tenancy agreement.

Read: How to make a Will at home

What happens to jointly owned property without a mortgage when you die?

When you die and do not solely own a property then how you are recorded as owning the property in the registers of title or title deeds will dictate what happens to your property.

Jointly owned as joint tenants

When you die, with or without a Will, any property you own jointly with someone else (typically a spouse but it can be anyone), will automatically pass to the surviving joint owner.

How you ‘own’ a property is documented in the Land Registry registers of title (or if a property is unregistered the title deeds) and these official documents will clearly state whether you own the property as a ‘joint tenant’ or ‘tenants in common’.

A joint tenancy recorded in the registers of title or title deeds can override anything that’s recorded about what you’d like to happen to your property in your Will.

So even if you have left your equal [50%] half share in the property to your children in your Will, they will not inherit your half share of your property when a property is jointly owned; the other half owner automatically inherits your half share instead.

Most couples will have a joint tenancy ownership on the understanding that the surviving owner will leave the property to any children. If you want this to happen, you should make sure both you and your partner prepare a Will when you buy a property. Couples with joint tenancies who have children and want the exact same thing to happen upon either person’s death will make ‘mirror Wills’ - this is also cheaper than making two separate Wills.

Owned as tenants in common

If you own a share of a property as ‘tenants in common’, then your share in the property will pass to your estate; none of the other part owners will inherit your share in the property unless you’ve specifically stated another owner is a beneficiary in your Will.

The benefits of making a Will when you own a property as tenants in common is that you can make sure your part share ownership in a property passes to the person you want to inherit it (i.e. your children).

Don’t risk leaving your loved ones vulnerable and use our online Wills writing service today to make sure all of your assets and property go to the right person when you die.

You can make a legally binding Will online for as little as £29.99.

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Read more: Joint Tenants and Tenants in Common Explained