There are many different types of mortgages in the UK – and one of these is known as a ‘joint mortgage’. It is important to know all of the different options available to you when the time comes to purchase a house.
It is often an unfortunate complication when someone dies, while part of a joint mortgage. What does this mean for the remaining person?
Read on for a clear look at what happens to a joint mortgage when someone dies in the UK.
What is a Joint Mortgage?
A joint mortgage makes it possible for two or more people to buy a property together. This option is often taken by couples who are going to be living together in the property, but it is also done by friends and family members.
A joint mortgage typically allows both parties to live in a more expensive house than they would otherwise have been able to afford. This is because the combined wealth of two people allows them to put down a greater deposit (and make larger monthly mortgage repayments) than they would’ve been able to do on their own.
Mortgage lenders also view a joint mortgage as a ‘safer bet’ than a mortgage for one individual. This is because you have two incomes to cover the repayments, rather than one.
There are two key types of joint mortgage, which have been covered below.
Joint Tenancy versus Tenancy in Common
There are two main types of joint mortgage: ‘joint tenancy’ and ‘tenancy in common’.
A ‘Joint Tenancy’ in the UK means that everyone has equal rights over the property. This means that profits are split equally if the house is sold. This is a very popular option for couples who are buying a house together.
A ‘Tenancy in Common’ means that everyone owns shares in the property – and the number of shares owned can vary from person to person. A ‘deed of trust’ will provide information on how many shares is owned by each person. This option is more common between families and friends.
What Happens to a Joint Mortgage when Someone Dies UK?
What happens to a joint mortgage when someone dies can vary based on the circumstances, as well as whether you have a joint tenancy or a tenancy in common. Either way, if someone passes away, then you should notify your lender as soon as possible.
Under a joint tenancy agreement, the mortgage is automatically transferred to the other person if one of the two people dies. That person will then become entirely responsible for the repayments. If the joint tenancy is between three or four people, and someone dies, then it becomes equally split between the remaining people.
You should keep in mind that the repayments may be made easier if the deceased person had a life insurance policy. This is why so many people choose to take out this type of insurance. In either case, you should always speak with property and mortgage experts if you require guidance when someone dies in a joint mortgage.
If someone dies under a tenancy in common, and the deceased individual did not leave a will, then their share of the property is inherited by their closest living relative. If this is you, then you own the whole property and are responsible for mortgage repayments. If it is someone else, then you own the property jointly in common with them.
What if I can’t afford the payments?
Many people opt for a joint mortgage because they are unable to afford the mortgage repayments on their own. By this same logic, it is not uncommon for someone to be unable to afford the mortgage payments after their joint owner has deceased.
A few options available to you include:
- Asking your lender for a ‘payment holiday’
- Extending your mortgage term, so repayments are made over a longer period
- Moving to an interest-only mortgage
- Selling the house and moving to a cheaper one
- Remortgaging to find a better deal
If you are unsure about which route is best, then you should get independent specialist advice on how best to handle this situation. It is very common for a survivor to be unable to afford mortgage repayments, so don’t worry – there are lots of experts in this field who you can contact to help you out.
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