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.

Please don’t worry as long as you are working or die whilst working at current job it will all be fine. You could make an overpayment even a small amount monthly so that there is enough to cover the mortgage until the death in service pays out. the mortgage company couldn’t just throw her out as the house wouid need to be sold. Yiur solicitor or executor can prove she will have the means.

If you died whilst still working your death in service would be paid to your nominated person probably your wife. She would then have to decide whether to pay it off of house or sell house and keep the equity. She would probably sell house, downsize and keep DiS to help her to live.

This ^
when we were getting a mortgage 5 years ago we were advised to get life insurances but it wasn’t a condition.

Back in 2003 when we took out our 1st mortgage, Northern Rock told us we had to have life insurance and it was a condition of the mortgage. Gast forward about 10 years and Norrhern Rock collapsed and we receive a decent anount of compensation as that was unlawful.
Our current mortgage is not dependent on us having life insurance. My husband has it for if anything happens to him, but I don't. Due to many illnesses in my dad, the life insurance offered was extortionate so we decided against it.
If you were to pass away your wife could either clear the mortgage with your death in service payment or sell up x

It is correct. Life insurance is not necessary for a mortgage. I think some people might be confusing this with house insurance. Banks tend to require house insurance (building only) but not life insurance.

If you passed away, it depends on how your property is set up. Are you under a joint tenancy or tenancy in common? If it is the former, your wife inherits under the survivorship principle and she could contact the bank and see if it could be transfer the mortgage to her sole name. This is rarely problematic to do, as long as she can afford to make the mortgage repayments. If she could not qualify or could not afford mortgage payments, the bank would seek possession of the property, sell it and your wife would get whatever was left after the mortgage was paid off from the proceeds of sale.

But he may not be working when he dies. OP could be made redundant, be fired, resign, be laid off because he's too ill to do his job after extended illness. There's many factors that could prevent a DIS payment, so all those saying "it will be fine, don't worry" are misleading him.

If the Death in Service will cover the outstanding mortgage I don't see a problem.

I had a death in service payment with my previous employer

i no longer work for them

but I have a deferred pension with them and if I die before I take my pension- they pay out a lump sum

When my first DH died suddenly I got a death in service payment from his employer within a month.

We have similar mortgage details, £300k mortgage on a £625k house. DH is a high earner, I earn peanuts. Life insurance was not required but we do have it so realise this is the but that’s different.

If you die and your wife is unable to pay the mortgage she will still be able to sell the house, pay off the mortgage and buy a cheaper house.

So what's the issue then?
Death in service means mortgage paid off. Wife then chooses to remain in house or if she can't meet the bills and upkeep then she sells and has 600 large ones to do what she wants with.

The OP assumed the mortgage company would instantly seize the house from his wife, despite pending funds. You can read all their posts and see they have been better informed now.

Gosh, I'm pretty shocked tbh.

I'm not surprised that Martin Lewis wants to get some sort of personal finance on the curriculum.

I'm genuinely not being snippy, but how do you get to an age where you have >£200k equity and a decent enough job for a bank to lend you £360k but you don't have a basic understanding of your own personal finances / situation.

Hopefully you've got the assurance you were looking for OP.

Wben my DSis died, her mortgage company stopped the mortgage payments and put it on hold until the death in service and any further monies came through. As Executor, I just had to keep them updated until it came through

This really isn’t a thing these days!

You have to have home insurance while there's a mortgage but not life insurance because if you die the bank just gets their asset back.

I 100% agree. I meant as long as working in this job. He literally can’t get life insurance so there is little he can do at the moment, there is no point worrying over it that make him ill and it might not happen. Every month that goes by they will own a bit more of the house meaning his wife will have more equity should she need to sell and move. May as well enjoy a bigger house plus if live in London and south east it unlikely they could find a smaller property easily and spend money on moving costs and stamp duty,
he has savings too he doing the best he can and I felt he needed to think positive.

Yes that’s right. I never took life insurance in my first flat as just me no dependants it was an unnecessary overhead. In 90s the banks made you take a mortgage protection policy out of you had less than 5% deposit though.
days of 100% mortgages.
of course if you take out life insurance when in 20s it’s very cheap compared to taking it out in yiur 40s say

Yes that true, it's never been a requirement of any I have had however building insurance was.

Yes thanks. I realised how out of touch I am after the previous 10 people told me.

This has recently happened in our family. My mums much younger partner died unexpectedly and there is no way she can pay the mortgage. The house is being sold and she is using the equity to buy a smaller place. Mortgage payments are on hold while that happens.

One thing I would say is make sure you have all of your financial details documented for your wife to access. My mum has had a nightmare as my stepdad dealt with all the finances, all online only and she didn’t know who the providers were, account details etc. it’s been awful for her.

I bought my first house in 2006, life insurance was recommended but not necessary, I think that practice stopped a long time ago. We only got life insurance once we had kids, up until then we worked on the basis that if one of us died and the other couldn't afford the mortgage we would downsize.
OP have you tried other avenues? My DH was refused on the obvious large companies, but when we started with a wealth manager for our pensions etc they were able to find us life cover.

We are trying to buy our council house under RTB. Neither can get life insurance and it's not a requirement of the lender

The mortgage would remain but she would have to meet the mortgage payments. Is she insured? If she were to pass away, then you might be in trouble meeting all the payments due to your ill health. You can cover that risk at leases by insuring her. Does the DIS match the outstanding mortgage or would there be a shortfall? Obviously if you left the employer for whatever reason the DIS would fall away.

Why are you being so rude, do you feel better for your little outburst? Would be be so rude to someone in the street if they asked for advice and help.