If your partner has recently passed away, then you will undoubtedly be going through a challenging period in your life. Certain aspects of your life may also have been cast into doubt – for example, property ownership and paying off the mortgage.
While managing your finances and living situation may seem unbearable right now, getting everything sorted can prevent you from selling the house or paying expenses that could otherwise be avoided.
During the complex probate process, numerous factors come into play in determining the fate of your home after your partner’s demise. Two crucial factors are how it was owned before their passing and your relationship to them. Understanding these aspects can empower you to navigate this challenging time with confidence.
Keep reading our blog below for more details about what happens to your home when your partner dies.
Do I become responsible for the mortgage if we are married?
If you and your partner own the property as joint tenants, you automatically become responsible for the mortgage if they pass away. You will need to meet all the repayments yourself, which can be difficult if meeting your payments largely depends on two incomes.
Tenancy in Common
If the house was owned as a Tenancy in Common, the deceased person’s Will should dictate who will inherit their share of ownership. If a will was not written, you may need to speak to a solicitor about what happens next and receive personalised legal guidance.
This could include advice on how to contest the distribution of the estate, how to negotiate with other potential beneficiaries, or how to navigate the legal process of transferring the property’s ownership.
Solutions for mortgage repayments
When the burden of mortgage repayments falls solely on you, there are potential financial solutions that can make it easier to meet your payments.
Life Insurance payout
For instance, if your partner had a life insurance policy, the payout can be a significant help. Similarly, any other cash or assets tied up in the estate that pass over to you can provide valuable financial support.
Equity Release
If you are over 55 years old, then Equity Release may also be an option worth exploring. Equity Release is a way of unlocking the value of your property and turning it into a cash lump sum or a regular income.
It involves borrowing money against the value of your home, which is then repaid when the property is sold. Remortgaging can be expected in this scenario, too, as it can enable you to get a mortgage with payment terms that you alone can afford.
If you cannot meet your repayments, the lender may request that your property be sold. It is advisable to contact your lender and outline all your options.
What happens if we are unmarried and my name is not on the mortgage?
Even if you and your partner were living together if your name is not on the mortgage and you are not married or in a civil partnership, you may not have any legal claim to the property.
This means that you may not be able to sell the property, make changes to it, or live in it without the permission of the legal owner. It’s important to understand your legal rights and seek professional advice if you are in this situation.
The Laws of Intestacy state that the house will pass over to the deceased person’s children if there is no Will. The following recipients would be Grandparents, nephews, and nieces.
How to access Life Insurance funds
If your loved one passes away and you know they had a Life Insurance policy, you should contact the provider. They will typically ask for the policy number, the life insured’s GP/Doctor’s contact details, plus information about who you are and your relationship with the insured person.
Once you provide this information, the provider will start the process of assessing the claim and, if approved, will release the funds to you. This can be a significant financial resource during a difficult time.
From here, the provider will assess the circumstances and may ask for any further evidence, such as a death certificate.
Every Life Insurance policy has a legal owner, and it is most commonly this individual who receives the payout. However, if the policy owner is now deceased, the payout will pass to their representative—usually the executor of their Will. The Will should then hopefully dictate who the payout will go to.
Do I have the right to sell the house?
If you owned the house in a Joint Mortgage with the deceased, it will now legally belong to you, and you, therefore, have every right to sell it.
Similarly, if it was owned as a Tenancy in Common, and the deceased person’s Will says that the shares should pass over to you, then you have every right to sell the property.
Will I be forced to sell the house?
You will only be forced to sell the house if you are totally unable to meet mortgage repayments and cannot remortgage. Unfortunately, the lender can impose this upon you.
Selling the house can have significant financial and emotional implications, as it may involve moving to a new location, downsizing, or losing a place with sentimental value. It’s important to consider all your options and seek professional advice before making this decision.
Remember, you don’t have to sell the house depending on your financial situation. You could also consider letting it out or living in it yourself. It’s crucial to seek financial guidance from a qualified expert who can provide you with the necessary support and guidance during this challenging time.
Will I be forced to remortgage?
If you are able to continue meeting your mortgage repayments—especially once a Life Insurance policy pays out or you receive a cash influx from the estate—you will not be forced to remortgage.
On the other hand, if you cannot meet your monthly payments, you may choose to remortgage to reduce your debt payments.
However, the lender can require you to sell the property if you are unable to meet your repayments, and remortgage is not considered a viable option.
Remortgage is the process of switching your existing mortgage to a new deal, often with a different lender. It can be a way to reduce your monthly mortgage payments, consolidate your debts, or release equity from your home.
In this position, you should discuss the possibility of remortgaging with them to see how it could make your life financially easier and prevent you from having to sell.
Do I pay Inheritance Tax when my partner dies?
Whether you pay inheritance tax on a property usually depends on how it is transferred to you. If the house was owned as a Joint Mortgage or Tenancy in Common and is now wholly owned by you, then there will not be any inheritance tax for you to pay.
On the other hand, if you do not own the house before your loved one passes—and it is then transferred to you through a Will—then it is totally possible that Inheritance Tax will need to be paid.
You should speak to a solicitor for guidance on your situation and any support with paying inheritance tax.
Should I consider Equity Release when my partner dies?
Equity Release can act as an additional income for you as you start to receive regular ongoing payments (if you choose) by taking out a plan. This can make all the difference in meeting your new mortgage obligations.
This is also a worthwhile route to consider because retaining ownership of the house allows you to benefit from any increases in its value.
On the other hand, if you want to pass on the property when you pass away, Equity Release will reduce your stake in the house and, therefore, the amount that you pass on in your inheritance.
You should almost certainly get financial advice from a qualified expert on whether Equity Release is intelligent. This professional can open your eyes to other solutions that you may not have considered and, therefore, help you make the best choice available.
How do I find out who owns a house?
The Land Registry holds information on property ownership. If you complete a form and make a small payment, you can learn who owns your house, which may be crucial in your next steps.
