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.

This was the interesting thing about the whole endowment furore! Those that held them to the bitter end did quite well out of them in most cases.

Thanks. My mind was just racing. We are set up as joint tentants and she is named as sole beneficiary on my death in service form.

It is risky to rely on death in service because the OP might not actually be 'in service' when he dies, if he could not work for the employer, as he resigned, in between jobs with this benefit, retired or could not work for whatever reason.

@LemonGelato you mentioned the death-in-service is tied to joining the pension scheme. If it is a defined contribution scheme and OP leaves the company for whatever reason, the pension pot is still his but does the 'death in service' insurance part of the pension fall off because he left the company?

She would sell and buy a £240k house mortgage free with the equity, repaying the outstanding mortgage.

It’s pretty easy not to. I was disqualified late 20s until the time length of disclosure lapsed for the conditions. And they weren’t chronic but acute!

In my case the death in service will cease on the day I leave my employer

As far as I can see though & I would check it your Death in Service payment should go straight to your wife on your death quite quickly so paying off the mortgage would not be an issue.

Does your Pension Scheme have a widows pension in which case were it to be an issue she would have some money from that to help pay it.

@kaela100
Type 1 diabetes, eating disorders, previous cancer that you’ve survived over 5 years, chronic illness that is known to shorten your life, previous suicide attempts.

The first hint you aren’t going to live as long as your peers is you won’t get life insurance. In dhs case it turned out to be true.

This has jogged my memory. I had a teacher friend who worked in a school where the head teacher had a heart attack after school one day and died in service. His wife received full DIS payments and was left comfortably off. A year or two later a female teacher received a stage 4 cancer diagnosis and was given six months to live and signed off sick. However, she went on for much longer than expected and when she eventually died her husband and colleagues were shocked to learn that she had a reduced payout because she hadn't actually worked for more than a year. It prompted my healthy 40-y-o friend to go out and get £200k life insurance.

If you have any doubts, OP, it would be worth getting detailed advice from your union or an independent solicitor on the nitty-gritty of your paperwork. Ask for written advice on where you'd stand if you died while working, and died six months, 12 months, 18 months after being signed off sick. What if, while you're signed off sick, you're made redundant or your contract is terminated? What provision is there? It's better to know now and plan. Good luck, tough situation to be in.

Please stop worrying unnecessarily.

Firstly, the bank can’t simply ‘take possession’ of your house.

They have to apply to the court for possession and the courts will usually only grant them possession in order to sell if the debt is in considerable arrears and there is no clear repayment plan or an agreement was made but the debtor has defaulted yet again.

Assuming the payments were up to date before your demise, your wife would need to write to the bank and send them copies of any correspondence that mentions the death in service benefit and ask them to pause the repayments to allow time for the paperwork to be completed.

My DH has various health issues too so he’s put all the essential paperwork re savings, pensions, log in details, etc. together in a single folder that I can access if and when required. Can you do something similar?

I remember back in the 80's a colleague who had survived leukaemia as a teenager got life cover for his mortgage so I cant see that its that difficult if you go to the right placve

If DIS paid off the mortgage, she would own it outright. Would she be able to afford all the running costs though? Does she have LI?

You should be aware that depending on your pension arrangements, your Death in Service benefit may be caught by the changes in Inheritance tax announced in the October budget.

When my cousin's husband died suddenly there was no mortgage insurance, or any insurance, as he didn't believe in it and she had to work into her 70s to pay the mortgage. That would be a mortgage taken in the late 60s or early 70s.

When I've administered this in the past for people it's gone through pretty quickly. Less than 2 months

It may alter for different lenders, however when my husband passed away the bank did nothing.
I received enough with death in service to clear the mortgage if I had wanted to but the investments I made were far more profitable for me than clearing the debt would have been (this would depend on how you invested & interest rates).
I continued to make the mortgage payments, all correspondence was addressed to myself & Dcsd person responsible for........
The bank were fully notified, I have since cleared the mortgage

From sad experience death in service payments go through quite quickly.

Ring you pension provider and get a quote of predicted payout as a pension and also for what a spouse would get if you die. Ask if this changes if you die before drawing your pension (some refund payments made, rather than pay a percentage of the pension to a widow).

Ring HR and ask what happens with the payout if you are sick before dying.

I'm sorry that for whatever reason you are worrying about this, but I would do the sums and see if you can make sure that your wife can pay the bills for a few months at least. Do you have joint access to the account the bills are paid from (it is illegal for her to move this money after death without a death certificate/will etc )?

The mortgage company just want payment, if your wife can pay the outstanding amount in one go or monthly payments till complete they won't want to repossess.

It will be true.

I also have a mortgage with no requirement of life insurance. I had heard of people needing it but it was not a requirement for our mortgage - it will depend on the bank.

Downsize asap

Insurance premiums are through the roof so I can imagine OP would struggle and if he could get life insurance I can't imagine it would be affordable. I had enough problems getting affordable travel insurance let alone life insurance!

Not all death in service payments are linked to pension but many are. It just depends how the life insurance is set up whether you can get it without being a member of the relevant pension scheme.

So yes, if you leave the employer the pension 'pot' remains but the insurance cover stops at the point employment ends/on "last day of service". Which includes retirement date. I've not known ones to stop at point of resignation, only when notice ended.

I can't get health insurance but also have death in service benefits. It would pay two thirds of the mortgage off but dh would be able to get a small mortgage to cover the rest, particularly as mortgages can go up to age 75 now. If he were to die, his death in service would also pay off 80% of the mortgage and he has a small life insurance policy which would pay the rest with a bit left over. Hoping we both make it to retirement with the mortgage paid off.

Maybe make some enquiries about life insurance- the premiums might be high but you'd have peace of mind. Try Aviva.

Otherwise have a plan B of an area she'd be able to buy in outright and is happy to live in if you had to sell your house. Overpay your mortgage,if you can, to bring the balance down as quickly as possible so there's more equity,

Speak to an insurance broker about life insurance, rather than just using the online comparison sites. Some life insurance companies specialise in what's called 'impaired lives', which means people who have conditions which would prevent most insurers from offering cover. It is obviously more expensive. But it might be worth it for you.

Make sure you have filled out expression of wish with your employee for your DIS benefit. If it is enough to cover the mortgage then the house should go to your wife as joint owner and the mortgage paid off by DIS.