Do you have a mortgage protection plan sorted? Have you ever thought about what happens to your mortgage debt when you die?
Well, don’t worry. We have the answers sorted for you.
If you owe money on your mortgage, chances are it will remain in force even after your death. In cases of the occurrence of a co-signer, he/she may be obligated to pay back your mortgage loan. Traditionally, a spouse or an immediate family member takes over the finances and gets to keep the home after you.
If there is no one to pay back the mortgage, the lender might seal your property and sell it. It’s time like this when you should consult a financial advisor to help you understand the legalities of the matter and act accordingly.
Read this blog to learn about what happens to your mortgage when you die and what are the solutions for it.
Mortgage Protection – Life Insurance or a Will?
The roof and walls of your property only provide the structure to it. But it’s your family who creates a home out of it. So, what happens to your home when you die? Scary, right?
Having a life insurance plan in place helps keep your home safe and your family secure, no matter what happens in the future. Alternatively, a Will carries all the solutions to your estate plan and also, takes care of your mortgage.
Who Covers Your Mortgage Debt When You Die?
Like mentioned before, one of the ideal solutions to paying off your debt is to have a Will. Your Will includes all your assets and how they’re supposed to be distributed as per your wish. But the job of an executor before distributing your assets is to always pay off your creditors after your death.
However, the process can differ in the case of mortgage debt.
If there is a co-borrower present, there’s no need to mention your mortgage debt in your Will. Nevertheless, in the case where the inheritor of your home decides to take over the responsibilities of your mortgage, they can legally do so.
If, however, there’s no one in place to take care of your mortgage, the mortgage servicer will start the process of seizing your home.
How to Prepare to Pay Off Your Mortgage Debt After You Die?
Planning is key to maintaining your finances and family security even after your death. Proper estate planning will ease things for your family and you can rest in peace if the unfortunate happens. Here are a few ways you can prepare to pay off your mortgage debt after your death:
- Life Insurance: With a proper life insurance policy, you can help your family inject a good sum to pay off your home loan and other bills. This money also presents the surviving relatives with options of what to do and not to do with the house.
- Ownership Plans: Consult a legal advisor and analyse the pros and cons of holding your property in a trust or business entity. You’ll also have the option of multiple ownership of the property. Ensure to choose an option that keeps your home out of probate and reduces costs while making the transition easy.
- Liquid Cash: Death in the family can be a trying time for its members to take serious, financial decisions. That’s why it’s wise to let the funds come to your family. This can minimize the stress and reduce all the paperwork. Your family can even consider selling the home for a good sum if required. Meanwhile, your family can pay off the mortgage, look after your property, and stay up-to-date with taxes.
There’s not just one way to look into your mortgage debt payment after your death. However, it’s important to have your options and implement the best one that suits you. Our best advice coming from our legal experts is to have a Will written in time to prepare for unforeseen challenges.
If you need help, you know whom to call.
AasaanWill Zaroori Hain!