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.

In that case she would have to ask the mortgage company for a payment holiday. But are you sure the payout won't be quick? It is intended to support the bereaved partner so speed is of the essence. Ask the company.

I think that the mortgage provider will force the sale of the house to pay off the loan if it can no longer be serviced.
It sounds like your wife would have enough equity to buy a small house almost outright.

I think the question you really want answering here is really about ... how long might your wife have to wait for financial payout if you died and would the mortgage co be willing to wait? I'm not sure but hopefully someone can come along and help. I know when FIL died the bank gave MIL a loan until probate came through.

If your Death in Service benefit is related to a pension read up on Money Saving Expert on that...intact thats generally a good place to go.

Finally - a post by someone who knows what they're talking about!

Well life assurance isn't a requirement, the loan is obviously secured against the property.
Does your death in service cover it? Does your employer offer benefits that allow you to increase your death in service benefits?
You could also look at specialist providers e.g will exclude certain illnesses but cover you against accidental death.

Death in service payments don't usually take months unless there is some disagreement about who the beneficiaries are. I've done 3 in my HR career and all were processed and paid out within weeks of getting a copy of the death certificate from next of kin. Just make sure you have fully filled in the 'Expression of Wishes' form at work and don't rely on your wife being in your will as that can slow it down.

Obviously not all companies offer this benefit (or it's tied to joining the pension scheme). If you move jobs and new role doesn't have it, you will need to look for a separate policy. Just like all medical or travel insurances it is possible to get life insurance with a pre existing condition it will simply cost more in premiums. Go to a insurance broker who can do a whole of market search for you.

Your wife will own the house outright. She becomes 100% liable for the debt secured by the mortgage and has to keep up with payments. In reality she could probably arrange a short payment holiday of a few months while your death in service benefit came through. Thereafter she could clear the loan with the death in service benefit if there was no prepayment fee - or it could sit in an investment and be drawn down over a number of years to meet the payments.

so long as you have the death in service benefit, all is fine.

Very much doubt he thought this. He's asking for advice. Chill.

If the house is in joint names, AND set up that in the even if either death the share goes to the other, AND your death in service is enough to pay off the mortgage, then the mortgage is paid off and your wife has nothing else to pay.

I'm confused what the problem is? I would think the bank can arrange something for one or two missed payments whilst the paperwork is sorted - death in service is excluded from any sort of probate as long as it has been assigned to a beneficiary, and is usually processed by employers far quicker than probate anyway.

Unless the house is in your sole name.

Or your wife spunks the death in service on strippers and shoes in which case the bank will repossess.

You need proper advice as to how your house ownership was set up, it may be that your share needs to go into the pot of your estate. Have you got a will sorted?

Agreed. On an interest only mortgage back in the day, it used to be obligatory, but not nowadays for a standard repayment mortgage.

The assumption is that if needs be the house is sold to pay mortgage off.

It’ll be fine, op. The death in service benefit will cover the mortgage and they don’t generally take very long to be paid (make sure you’ve filled in your nominee form). Your wife would need to inform the bank. If it’s a question of a short payment holiday while the admin is done, that wouldn’t be a problem- repossessing a house is a long process in itself, even if they wanted to do it which they certainly wouldn’t.

Have you tried specialist life insurance companies? Ours is with Partnership as my H can't get life insurance from anywhere standard either. It's expensive but worth it.

Plus we have both of us insured on the same policy (to pay off the mortgage) so the fact that I'm 'fine' brings down the cost than just having H on his own (as it would only pay out on the first death - and I'm as likely to be run over by a bus as he is).

Get an IFA and see what they can do. Hopefully the death in service payment would help but it's unlikely to pay off the whole thing?

Its a contract
The opening bits define who is party to the contract

First party : Bank ABC reg no 1234
Second party : Mr Lessthenhe and Mrs Lessthenhe

Property no1 Nice Property Road owned as Joint or Common tenants which the bank now have the first right to any money received from a sale (or distruction rebate fire insurance etc)

Joint and separately section
You both owe 100% of the loan
Sort out who pays what we dont care once we get paid on time and in full.

Interest and small changes
>>> here the bank may say that both of the second parties must agree so if Mr Lessthenhe cant agree (due to being dead) the bank get to choose.

Early repayment
See above

Payment holidays
peachgreen was given a paymemt holiday. But if she had no funds to pay the first payment after the death she created the breach.

So NB has your wife got savings in her own name and/or in a joint account which automatically tranafers to her ownership as yours will be locked once a bank knows of your death and all cash draws from you account should be stopped by the bank.

So you need to look at what you got plus as you have a known risk of death within the term of the loan has the bank tweeked its T&C to account for that eg gap between date of death and getting a death cert and then any cashflows from your job.

You need to look at the T&C of your employers scheme. What they need, when is the liable date date of death, date of notification, date of death cert. Its possible that timing or even an argument by Doctors on cause of death could delay in the death cert.

You can usually get life insurance with existing conditions it just puts the premiums up by a lot.

Might be worth considering an amount of life insurance to go directly to your wife. Even if it's £50-100k it would give her more options should the worst happen.

If you've nothing set up the mortgage will default. She'd need to sell the house asap and downsize. If you had any amount in either savings or life insurance it will help her.

She'd also be entitled to bereavement support payment for those with children. It's not much anymore as the conservatives eroded it but it's a little help financially for that first year.

Look into specialist life insurance for existing conditions.

Check out the terms for your death in service benefit and make sure all the details they hold for you both are up to date.

Wouldn't the house be re-possessed if your wife would be unable to make the repayments.

I have a mortgage in my sole name, not a high earner, no life insurance.

which life insurance companies refused you?

Your partner would likely qualify for Bereavement Support Allowance for up to 18 months. I wouldn’t rely on Death in Service, you could lose your job.

In my experience the death in service payment was made quite quickly. If your wife could service the mortgage anyway there is nothing to concern yourself with. Hope that puts your mind at rest.

You need to have enough funds to pay off the mortgage or the bank will take posession

Also you need a will to say how this is all supposed to work.

If the death in service benefits would pay the whole mortgage why are you worrying and why would your wife need a mortgage?

Makes sense to me. Which bit are you struggling to comprehend?

I got a mortgage as a single mum with no requirement for life insurance. I did take it out anyway but didn't have to. However my mortgage is a much smaller amount.

You and I are in similar situations with wives who earn less.
First, I'm surprised that you can't get life insurance from anywhere. There is bound to be someone who will cover you, a specialist broker might be able to help. If there are charities for your conditions, they might be able to recommend a provider.
I think the banks are used to this sort of thing happening. They know that probate can take forever, and you might find that the death in service grant comes through before the probate! It is enough to cover the mortgage, so your mortgage will be paid off, and your wife will own the home outright. If you are really worried though, go talk to the bank about it so they can reassure you.

Same, we have never had it either.