Outstanding mortgage after death

weemoq

Hi all we recently downsized but had a small mortgage to purchase the new house. If we died with this small amount outstanding would the lender seize the full house value or would our children pay the outstanding amount from our estate?

Asking the question to try and work out if we should use savings to pay it off.

Browntoa

The estate would need to clear the debt

TonyMMM

Your executor would have to pay the outstanding mortgage amount from your estate. If there were no other assets to cover the debt, the house would be sold to pay it - the balance after the debt is paid would be distributed as per your wills.

Flugelhorn

Any life insurance to cover the mortgage?

SevenOfNine

The mortgage lender (Tesco) froze the mortgage immediately & no interest was added from that point forward to the outstanding balance. Once LoA/Probate was granted they waited until the house was sold for us to pay off the balance. If we'd wanted to we could have used existing estate funds or our own money. As long as Tesco got paid they weren't fussy which of the 3 choices.

We were surprised at how UN-mercenary Tesco were as a lender. No mortgage payments, no interest added monthly, no harassing for payment. They just asked for regular updates on the situation. Very kind.

weemoq

Yes there is Life insurance.

Keep_pedalling

weemoq wrote: »

Yes there is Life insurance.

Is that payable on the first death? If not get insurance that does,

The important thing is to clear the mortgage for the surviving partner. When they go you kids are almost certainly going to sell your home whether it is mortgaged or not.