Mortgage Payments after Death

RedSoleShoes

Two brothers (neither married and no kids) buy a property and equally pay the mortgage payments (£275K mortgage on £425k property). Both mum and dad are still alive and kicking. One of the brothers dies without a will and without any life insurance. What happens to the house and the mortgage payments in this situation?

julie2710

Is the mortgage not insured? That would/could potentially cover the entire mortgage.

RedSoleShoes

julie2710 wrote: »

Is the mortgage not insured? That would/could potentially cover the entire mortgage.

It will be, when they get the application sorted. Just wondered what would be the outcome should one of them die before it was all sorted in that respect.

julie2710

If they are on a joint mortgage then each will be jointly and solely liable for the whole mortgage - therefore the surviving brother would have to find the deceased brother's portion of the mortgage.

RedSoleShoes

Ok, so the deceased brother's half of the house would not go to the parents then? I know parents are beneficiaries from their children's estates if there are no spouses or children involved so would they not get his half and be liable for the mortgage payments, or would it go to the surviving brother because he is the legal owner of the other half?

GMS

LilyDeTilly wrote: »

Ok, so the deceased brother's half of the house would not go to the parents then? I know parents are beneficiaries from their children's estates if there are no spouses or children involved so would they not get his half and be liable for the mortgage payments, or would it go to the surviving brother because he is the legal owner of the other half?

It depends on what basis the mortgage was set up.

If it was 'join tenency' the surviving brother will automatically inherit the other half.

If it was 'tenancy in common' the share will have been determined and will pass to the estate.

RedSoleShoes

So, if it ended up that the half went to the parents instead, I presume they are then liable for the mortgage payments and therefore, if they didn't pay, that half would revert to the lender's possession?

GMS

A lender cannot repossess half a property. If the mortgage was not paid the lender could appply to take possession.

Mortgage holders are jointly liable for the debt.

This thread highlights the importance of life insurance and estate planning. A property is an important ourchase and needs to be treated accordingly.

It is amazing how many people feel the need to insure their mobile phones but do not see the need to insure their lives.

RedSoleShoes

Just to add some further info, they are FTB and went through a mortgage advisor. Along the way, it seems this 'adviser' has not actually advised them properly, hence the situation they are in now. Obviously they realise that they have to take responsibility for decisions they make but it's a shame that we cannot trust a professional these days. They have no problem taking out insurance, this thread was merely to find out what would happen in the situation described.

Thanks for all the replies :-)

GMS

Did the adviser recommend Life Insurance?

Suitability Letters often mention the need to arrange this.

Life Insurance is relatively easy to arrange, but if done by the applicant direct it is important to make sure the correct cover is arranged.

If they are unsure they can speak to a Mortgage Broker of IFA to arrange it for them.

dunstonh

So, if it ended up that the half went to the parents instead, I presume they are then liable for the mortgage payments and therefore, if they didn't pay, that half would revert to the lender's possession?

No. They end up owning half the property whilst the other person has sole responsibility for the mortgage.

Just to add some further info, they are FTB and went through a mortgage advisor. Along the way, it seems this 'adviser' has not actually advised them properly, hence the situation they are in now. Obviously they realise that they have to take responsibility for decisions they make but it's a shame that we cannot trust a professional these days. They have no problem taking out insurance, this thread was merely to find out what would happen in the situation described.

To be honest, I have never known a mortgage adviser not recommend life assurance when it is required. However, the borrowers are free to say no to it.