Does a mortgage affect a spouse inheriting a house?

Brie

I've found out about a very odd situation that has left me somewhat baffled.  Hoping someone might provide some insight....

OK so I know of an elderly woman (92!) who is in debt.  She owns a very expensive home but since her husband died about 3 years back she has been unable to keep up with the mortgage payments.  Now there's all sorts of things that don't make any sense to me and I know that I likely do not have the whole story but wonder if anyone could offer any ideas on this.

I assume (can't confirm at this point) the house was owned jointly by the couple.  (as in they both own it and if one of them dies the remaining individual gets the whole place automatically).  At some point (don't know precisely when or why) a mortgage was taken out by the husband.  Everything was ticking along just fine until he died and all his money/salary/pension died with him.  So his widow has been trying to keep up the mortgage payments and has managed for a while but now all of her savings are gone and the bank is chasing her. 

The house has a value in excess of £1 million.  I believe the mortgage (what type? don't know) was for about £200k.  There is variable interest - so payments are currently increasing each month.  

Now what I want to know is....assuming that the woman has rightly inherited her husband's share of the house on his death but the mortgage was solely in his name does she have to repay it?  Or would on his death his mortgage become hers simply as she has inherited the house?

She claims it was his mortgage, not hers.  She's lived in the house for 40 - 50 years and so doesn't want to move.  But she's struggling as all she has is a state pension which is not enough to live on and pay the mortgage.  

Obviously there is a lot missing from this story and when I am able to find out more I shall certainly do so.  Unfortunately she is avoiding me so I can't ask more questions so simply want to be ready in case I can offer some assistance in the future.  

My guess is that her husband was a successful business type, got into some sort of bother and bought his way out of it by taking out a mortgage on the house.  Basically did equity release before it was a thing.  The widow should be sensible perhaps and sell up and clear the debt as that would still leave her with more than enough to get a lovely flat/bunaglow in the same area.  But few of us are always so sensible.  

So I think a lot of you will have questions and will speculate as I have but it's the nub of the legal bits that I am trying to figure out.  Does she own the place?  Does she have to repay the mortgage?   Yes I will ask if she can show me all the paperwork or let me talk to the bank on her behalf - if she will allow me.

MorningcoffeeIV

The mortgage is a debt, so needs to be be settled from his estate.

The house could be sold to do so, or she could finance it herself (through cash or further borrowing). Given the later seems not to be possible, she's looking at the first option. 

Are there no other assets that can be liquidated?

Brie

No other assets at all.  Well - likely some nice furniture but not enough to make a big dent I think.

So if they jointly owned the house he could legally take out a mortgage, supposedly on his half?  

I guess the things I need to know then specifically are:

• did they actually both own the house?  Or was it just him?
• who actually took out the mortgage?  
• what are the mortgage terms?
• was there a will? (maybe this is irrelevant)
• was there probate?  
• what else is she not telling me?

so still lots of questions and not much progress!!!

tacpot12

If they jointly owned the house (i.e. as joint tenants), he doesn't have half a house so the mortgage can't be attached to his half. The mortgage is attached to the property to ensure that the borrower (him) repays them. If he dies, his estate has to pay. 

Even if he owned the house as tenants-in-common, the mortgage would still be attached to the whole house. But in this case, she may not have inherited his half of the house if it was left to others in a will. It is possible that she didn't apply for probate and that this is still necessary if he left a will.

You cna get hold of a copy of the Title Deeds from the Land Registry for £3, and this would be worth doing if she hasn't got a copy. This will tell you whether they were joint tenants or tenants-in-common, or he was the sole owner. 
You need to look for both  their names and the following text ""No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court."  If this text is present, they were tenants-in-common. 

The mortgage company is entitled to repossess the property, but they might not do so if they think that it will result in bad press for them. It would be better for her to sell the property in her own time to get the best price for it. The mortgage company will sell it at any price they can, so long as they get their money back, and will not wait long once they have the court order to allow them to reposses.

I don't think you need to find out whether she was a signatory to the mortgage, as I don't think this will change anything.

If she has home insurance (which is another to check), she might have legal expenses cover and might get any legal advice she needs for free from her insurers.  

elsien

Equity reiease? 

K_S

@brie Based on the limited info in your posts, if the lady wants to spend the rest of her days in the house, which would be completely understandable, with a 200k mortgage on a 1m house, there should be a decent number of later life lending options (primarily equity release I'd imagine, though I'm not an expert in that field) that will help her borrow enough to both pay off the mortgage and release extra cash if needed to supplement her income. A few  lenders drop out at a maximum of 85 or 90, but she should still have options.

Brie

thank you everyone for your thoughts.  It's a difficult situation as the lady in question is a bit confused.  With a daughter in situ who is not really well informed or really that able to help.  I shall do my best for them and I appreciate your input.  I fear it's a situation that may run for a time.....then again she is 92.   

If I get the chance I shall update.

MWT

As long as she does own 100% of the house then I agree with K_S, equity release is the obvious route and even at 92 there are still plenty of lenders who either do not have an upper age limit, or even at 92 she is still below their age limit.

The important point though is that she does need complete ownership to get equity release, so it is essential to establish that her husband did not pass his share of the property onto anyone else in his will, and to get the deeds updated if necessary...