Mortgage On Death

[bond]

I have a mortgage. I also have funds in the bank to pay it off (but i won't for now due to other reasons). If I die tomorrow, and my will says beneficiary X should use the funds to pay the mortgage balance off and therefore take ownership of the property, would that work, or does the bank overrule since it still owns the property on the outstanding balance (and sell it at its own wish/price). Beneficiary X will probably know before the bank that I am dead and could pay it off couldn't they ?

[Maydup]

I don't think the bank would repossess the property on the death of the mortgagee. With or without the money in the bank to pay it off, i feel confident that the property could be sold by the beneficiaries and the mortgage paid off.

[tamborine]

Buy yourself an AM db10 and let your insurance policy settle your mortgage

[twix123]

On your death your bank account should be frozen, unless you have a joint account. The Executor of your will will have to apply for probate and account for your assets and liabilities, and pay any applicable taxes, before any funds can be released to beneficiary x to pay off the mortgage.

[Peter Pedant]

I think you need advice on making a will

The idea is OK - that you have funds to pay off the mortgage
and then the house passes to X

It would be better to have the executor do it
and dont forget IHT that has to be paid first - but having a mortgaged property will reduce the value of the estate so isnt a bad idea at all

[Buenchico]

The mortgage lender does not, never has and never will 'own' any part of your house. You own 100% of it and you always have since the day you bought it (unless, of course, some sort of shared equity scheme was involved when you bought it). You simply have a loan that's secured against the property.

When you die your house will form part of the assets of your estate, with the outstanding mortgage (along with things like credit card debts) forming the liabilities. The beneficiaries of your estate can neither take possession of your the assets or use them to settle the liabilities. It's the task of the executors of your will to balance the books and then to distribute your estate in accordance with the terms of your will. So they'd use the money in your bank account to pay off your debts (including the mortgage) and then dispose of the house in the way that you wanted them to do. If your will says "I give my house to Fred Bloggs" then the title to the property will simply be transferred to him. If your will says that the house should be sold (or there's no specific instruction about it) your executors will be free to sell it straight away or, if they so choose, to wait until house prices have risen.