Debt interest after death

Bolivar

I'm the executor of the will of a friend. When she was alive she took out a mortgage for living expenses against her house, which I'm selling now.

The mortgage company is continuing to charge interest on the mortgage until it's paid off. I intend to do this from the proceeds of the sale of the house. I have been advised that I CAN pay the interest that accrues after my friend's death but am not obliged to. Is this right?

Thanks

user1977

Who has given you this advice and on what basis? I don't see why the estate would not be liable for the accrued interest (in the same way that they'd benefit from any investment income).

Keep_pedalling

No it is rubbish, once the house is sold the mortgage plus outstanding interest will have to be paid before the remainder is released to the executor. Your conveyancing solicitor won’t release anything to you until that has happened and the charge on the property is removed.

loubel

Do they mean that the estate can continue to make the monthly payments until the house is sold and the loan paid off?

DancingBadger

One thing you need to consider now is the legal responsibility of being an executor.  Are you also a beneficiary under your friend's Will?   

Hoenir

Bolivar said:

The mortgage company is continuing to charge interest on the mortgage until it's paid off.

Correct. Interest will continue to accrue until the Estate of the Deceased settles the outstanding debt in full.  

DullGreyGuy

loubel said:

Do they mean that the estate can continue to make the monthly payments until the house is sold and the loan paid off?

If its that type of mortgage, guessing its likely to be an equity release mortgage so there are no repayments 

silvercar

You could choose to pay, but you aren’t obliged to do so. The only time it may make sense to pay is if you are a beneficiary, then the interest rate charged may make you consider paying the interest until sale in order to benefit from more of the sale proceeds, but there is no obligation to do so.

worth checking if there will be equity in the property- if the interest over all together with the capital borrowed means there is little equity, especially after costs, you may want to think again.

DullGreyGuy said:

loubel said:

Do they mean that the estate can continue to make the monthly payments until the house is sold and the loan paid off?

If its that type of mortgage, guessing its likely to be an equity release mortgage so there are no repayments 

Not always, you can have equity release mortgages whereby you pay the interest each month to preserve the equity in the property.

Bolivar

Thanks, very clear and quick advice. It's an equity release mortgage and I think the advice was that I can either pay the interest payments myself or let them be taken out of the estate when the house is sold.