None of us want to have to think about this. But, the sad reality is that some day many of us will have to.
If your partner dies, there will be important financial things you’ll need to be practical about.
One of the biggest of these will relate to the home you've shared. Especially if a mortgage on that home isn’t fully paid off, or the mortgage isn’t in your name.
We’re here to take you through what might happen in these circumstances, to help you navigate the decisions you’ll have to make at this awful time.
1. What happens to a mortgage if one of the borrowers dies?
If you have a joint mortgage and one of you dies, then you as the surviving partner become responsible for keeping up the entire monthly repayments.
If you took out the mortgage as “joint tenants,” then your home automatically transfers to you if the other “tenant” passes away.
You’ll need to get a copy of your partner’s death certificate, so it can be registered against the title of your home.
While it’s good that the home transfers to you automatically as the other mortgage-holder, it could be tricky to cover the costs of the full mortgage on your own.
2. What if I can’t afford the mortgage after my partner has died?
If you can’t afford the mortgage repayments then it puts you at risk of foreclosure.
Missed mortgage payments mean you risk having your home repossessed by the bank.
Your credit score will also take a hit, making it harder to get a mortgage in future.
If you're struggling, get in contact with your lender to discuss the options available to you as soon as possible.
This can feel hard, but remember they've spoken to lots of customers in your position and should be sympathetic.
It may also be worth getting advice from an independent financial advisor, who can look at your situation and help you to make sense of it.
If you're over 55, then equity release or a lifetime mortgage may be an option.
Some mortgage lenders make it a condition that you take out life insurance at the same time as getting a mortgage. So it's worth checking if your partner was covered by a policy.
3. Can I pay off my mortgage with life insurance if my partner dies?
If your partner had life insurance, a pay out will usually be enough to clear a chunk or all of your mortgage debt.
At the very least, it could buy you some time by covering mortgage payments while you take some time off to grieve.
Mortgage protection insurance is specifically designed to pay off the whole of a mortgage if one of the homeowners dies.
If you don’t know if your late partner had life insurance, it’s worth asking their employer and contacting companies you think they might have had a policy with directly.
4. Do I have to remortgage if my partner dies?
This is quite likely. It depends on your circumstances and what kind of mortgage you have.
A fixed-rate mortgage might mean you’re locked in to your current mortgage until it ends, and will need to pay a penalty fee to end it early. These fees can run into thousands.
Your lender will look at your financial position, such as your salary, and the equity in the home, and hopefully offer you a new deal.
This might be a good opportunity. Remortgaging could help to make your monthly payments more affordable on one income.
Banks and lenders are used to handling requests like this and will hopefully be sympathetic to your situation and help you to find the best available deal.
But, if it’s a bit much right now, you can always use the services of a broker to help you negotiate a better deal.
5. What if my partner dies and the home was in their name only?
If you and your partner were married, then your marital home passes to you automatically in law even if you weren’t named on the mortgage.
This means you’ll be responsible for keeping up with the monthly payments.
It’s unlikely you’ll be able to take over or transfer a mortgage into your name. You’ll likely have to arrange a new mortgage in your name only.
This means going through the usual affordability checks with the bank. If they won't loan you enough to keep up your marital home, you might be left having to sell up.
6. What if I’m not on the mortgage and we weren’t married?
If you weren’t married or in a civil partnership, and your name wasn’t on the mortgage, things can get a bit more complicated.
You may have no legal claim on the home you’ve shared with your partner.
If you have children together, the property will pass to them automatically, unless there’s a will stating otherwise.
Your partner will hopefully have left a will detailing who they’re leaving any property to.
However, an estimated half of Britons over-55 currently don’t have a valid will. So it’s possible that someone might die before they’ve had a chance to get this organised.
This can be a very difficult situation for you as the remaining partner, who may face losing their home.
If your partner has left their home to you in their will, you'll need to request a grant of probate. This is basically a piece of paper that gives you administrative rights over the home.
7. Do I have to pay inheritance tax on my home if my partner dies?
Again, the answer to this question depends on your circumstances.
If you’re married or in a civil partnership, then your partner’s portion of your marital home passes to you. The money tied up in the home is also exempt from inheritance tax.
But, if you and your partner weren’t married and a portion or a whole property has been left to you, it will be subject to inheritance tax if it’s over the threshold.
8. What if we co-own a home but aren’t a couple?
If you get a mortgage with someone else, you can choose to be either “joint tenants” or “tenants in common.”
The first choice is usually preferred by couples, as “joint tenants” mean the full home ownership is passed onto the other person automatically if one of you dies.
But “tenants in common” might be the type of mortgage taken out by people buying a home together who aren’t family or in a relationship.
Under this clause, the home is co-owned, but it won’t automatically pass to the other in the event that one of you dies.
The other mortgage-holder “in common” can pass on their chunk of the property to whoever they wish to in their will.
The part of the home they own will also form part of their estate for inheritance tax purposes.
Usually in this case, the property will need to be sold in order for the instructions in the late co-owner’s will to be carried out.
A grant of probate will also need to be taken out by the will’s executor.
This is likely to be tricky if you’re a co-owner. So it’s worth knowing all the facts up front.
Selling up after the death of a loved-one?
After someone dies, your home may no longer feel like the place you want to be.
Whether you’re selling up as part of a probate sale, or putting it on the market a few years later, we can help.
At My Home, you can find out in an instant what your home is worth.
But nothing beats an estate agent to come and see your home to value it. You can book an appointment with local agents through us.
While over on our House Prices page, you can get an idea of what homes are selling for in your local area.