Mortgage - what happens to the house if I die

[Lessthenhe]

What will happen to our house if I passed away?

Id just like to understand what will happen to our house if I were to pass away. I own the house with my wife and we have a £360k mortgage on a £600k house.

I cannot qualify for life insurance due to pre-existing conditions.

Would the bank demand immediate repayment of the outstanding mortgage? My wife is a lower earner so wouldn't be able to qualify for a mortgage.

I cannot qualify for life insurance due to pre-existing conditions. However, I have a death in service benefit with my employer.

Please no comments about that is a massive mortgage. I regret this but we have a 5 year fix that has recently started.

The death in service benefit would be enough to pay of the mortgage.

The death in service benefit would be enough to pay of the mortgage.

What's the problem then? You die, DIS benefit pays off mortgage. Your wife owns house outright.

I don't understand what your question is if your wife has a death in service benefit that would pay off the outstanding mortgage amount?

Problem solved then.

@Lessthenhe we were in a similar situation when buying our first house as DH couldn’t get life insurance due to a health condition. Our mortgage was contingent on him getting life insurance insurance so we ended up with a specialist insurer with some fairly hefty premiums. Our broker advised that his death in service benefit through work would have been accepted by mortgage company as well only he’d just changed jobs so hadn’t built one up that covered the outstanding mortgage - maybe yours does? Or maybe your broker found a lender that was happy to lend without the insurance. I think the main reason lenders ask for insurance is because they don’t like having to evict widows: bad PR I guess!

Why wouldn't you qualify for life insurance? Just because you don't meet one insurers criteria doesn't mean you won't meet another. If you have a terminal or life limiting illness you need to speak to an IFA immediately to see what they can do. Alternatively you could sell up and downsize now so it's one less thing for her to to worry about.

Under the current circumstances, without life insurance or a lump sum to pay off the mortgage, your wife would need to sell the house more or less immediately after you die.

It's definitely not compulsory, I've had 3 mortgages over the past 10 years and none of the banks/building societies required it. I do have life insurance but not the full amount of the mortgage.

I wonder if you could get life assurance covering you in the event of your death from something that is unrelated to your pre existing condition.

When DH died the bank gave me a mortgage holiday and allowed me to pay off a chunk with his death in service payment. They then switched the mortgage so it was in my name only.

If the death in service is enough to pay off the mortgage then your wife should be able to use it to pay off the mortgage and keep the house.

Presuming:
You own the house as joint tenants or if you are tenants in common you left her the house in your will - or it goes to her via the laws of intestacy - no will (if you have children after a certain amount they would get some of your estate under laws of intestacy- when there is no will.

You have nominated your wife for your death in service payment and your employers honour this nomination (no reason that they shouldn't for a married couple that are together)

Basically if you want your wife to have the house and the death in service - and you make sure that this is in place legally - then your wife can pay off the house with the death in service and keep it.

https://www.gov.uk/joint-property-ownership

https://www.gov.uk/inherits-someone-dies-without-will

Death in service benefit would cover the whole mortgage.

Would the bank let her remain in the property provided she was keeping up with mortgage payments?
We have savings.

Yes they would - assuming she is a joint tenant.

Why would she need to keep up with payments if your death in service cleared the mortgage, there'd be no payments to make.

Thank you.
We have some savings so she should be able to service the mortgage.
My death in service should allow her to repay the whole mortgage.

So then why wouldn't she be able to stay in the house? You are married yes? Is she also on the deeds?

The bank would work with your wife. It is in their interests. It would take a long time to repossess a house and evict the occupants and is in no-ones interests when the money is coming to pay it off.

They might want evidence of the death in service cover amount. They might still charge interest which will then accrue while they wait for the settlement so the amount owing could rise a bit. - I don't know banks policies on this so I just assume it is a possibility.

My mortgage had a box i had to rock to say I had life cover / death in service in excess of the mortgage amount, they didn't require proof.

In answer to op's question, if your wife couldn't afford the payments and you don't have sufficient death in service or insurance they will require her to put the house on the market asap. It differs between lenders but they will have a bereavement department and they will have dealt with this situation before.

I do suggest you look at specialist life assurance providers including via the support groups for your medical situation, sometimes it is possible to get mortgage insurance which is slightly different to life cover.

I am assuming death inservice payment would take many months to clear. I have no idea but I am assuming it won't be quick.

Yes, married and both on the deeds.

My DS has just got a mortgage without life insurance. He's single with no dependents so why would he pay for insurance?
I accept that if his status changes in future he'll need to reconsider and it might cost more then but atm it's not needed and the bank didn't ask for it. He does, however, have cover for illness/redundancy

If you do have sufficient to cover the mortgage their bereavement team will assist her to make the arrangements to pay it off, contrary to popular belief, they do try to help customers

I am in a similar situation @Lessthenhe in that I have a mortgage and no life insurance due to pre existing conditions. I did try to get cover for peace of mind but have been turned down by every company my broker and I have approached.

If your death in service benefit is enough to pay off the mortgage, then the house would be owned outright by your wife, surely? Is she on the deeds? I’d go back to your broker for clarity to be honest.

@Lessthenhe we were advised to take out life insurance even though DH’s death in service would cover the mortgage as that’s going on the assumption that you drop dead while still employed. If you were on long term sick and let go or just generally made redundant and then died, you’d get nothing. You might be able to get an insurance policy that precludes death relating to your health condition. Alternatively your wife needs to understand that the house will have to be sold in the event of your passing. A lot of people have that situation and she’d get the property equity.

The only way to truly know is to read the terms and conditions of the mortgage itself.

In that case your the situation in regard to the house will be fine. Your wife will own the house outright and can decide whether to stay in it or to downsize if she needs to.
I am sorry you are so ill.