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What happens to my mortgage if I die?
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# 1
sarah_elton
Old 31-12-2008, 9:17 AM
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Default What happens to my mortgage if I die?

Settle an argument for me....

I own my flat, solely in my name and have a mortgage. The flat is currently in negative equity.

Mentioned to OH last night that I never bothered with life assurance to pay out the mortgage if I die, because I was single and if I died the flat could just be sold - it's not like my mum would have wanted it.

He said that with it in negative equity, if I died they could chase my family for the debt.

I said no way - personal debt (not (a) in joint names or (b) with a guarantor) dies with you. They'd sell the flat, take any other cash etc I had, but if there was any shortfall HSBC would have to lump it.

He said, so if the flat had equity your family would get it but if it has negative equity the bank lose out? I said yep. He said that doesn't seem fair to the bank. I wasn't too upset by that fact. :rolleyes: If I banked with George Bailey maybe I'd make provisions for if I died but I think HSBC can handle a 5k or so loss. I also said it'd serve them right for being stupid enough to give me a 100% mortgage near the top of the market.

I'm sure I'm correct on this, because ISTR when I bought my flat asking on here what would happen if I died and there was a shortfall. My mum had asked before I bought lol. But just checking - anyone know?

I also said that if someone got themselves into 50k worth of credit card debt (again in sole name) and then topped themselves their poor family wouldn't have to stump up the cash, and same applied with the mortgage.

Carrying it on a bit - OH moved in in November. Under cohabitation law, if I died after say a year, even though everything's in my name would he ever become liable for that debt? He pays half the mortgage and bills - just gives me a lump sum each month and I pay all the bills myself.
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# 2
poppy_f1
Old 31-12-2008, 10:50 AM
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as far as i am aware like credit card debt they could try to get the remainder from your estate but if theres no estate then it would prob be written off

if there is no joint debt with your OH then he wont be held liable for your debts if you were to die again it would come out of your estate thats left but if theres no cash then the banks etc would get nada
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# 3
IlonaRN
Old 31-12-2008, 11:47 AM
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Change your arrangement with your boyfriend. He should still be paying you the same amount per month, but you need it to be classified as "rent". Preferably get a rent book too. You are allowed to make up to a certain amount per year from a lodger without paying tax on it.

If he continues paying "half of the mortgage plus bills", he will have a claim on the house should you split up. If he pays "rent", he isn't entitled to anything, even if he is paying you exactly the same amount. If he's a "lodger" rather than a "co-owner", then he won't be liable for anything if you should die.
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# 4
zaphod beeblebrox
Old 31-12-2008, 12:00 PM
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Found this that may be of interest ..

http://www.kings-college-brokers.co....s-paid-off.htm
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# 5
sarah_elton
Old 31-12-2008, 12:09 PM
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Quote:
Originally Posted by IlonaRN View Post
Change your arrangement with your boyfriend. He should still be paying you the same amount per month, but you need it to be classified as "rent". Preferably get a rent book too. You are allowed to make up to a certain amount per year from a lodger without paying tax on it.

If he continues paying "half of the mortgage plus bills", he will have a claim on the house should you split up. If he pays "rent", he isn't entitled to anything, even if he is paying you exactly the same amount. If he's a "lodger" rather than a "co-owner", then he won't be liable for anything if you should die.
Thanks - I was aware of this issue but the flat's going on the market this month, and will hopefully sell at some point during 2009, after which we'll rent together. It wouldn't be back in positive equity until 2011 or so (most likely) so I haven't been worried about his claim on it. If we split and he wants half my negative equity he's welcome to it.

I have a flat in negative equity and a small amount in savings. He has no property and good savings. He should probably worry about the situation more than me lol.

Last edited by sarah_elton; 31-12-2008 at 12:12 PM.
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# 6
sarah_elton
Old 31-12-2008, 12:12 PM
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Quote:
Originally Posted by zaphod beeblebrox View Post
Found this that may be of interest ..

http://www.kings-college-brokers.co....s-paid-off.htm
In saying "If you die before your mortgage has been fully paid off, then your debt will pass on to your estate and your next of kin will face the cost of paying back your mortgage." they seem to be neglecting the fact the property is an asset which can be sold to offset the mortgage. They don't actually cover the specific instance of negative equity once the estate has been sorted out...
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