What happens to your mortgage if you die?

You might wonder what happens if you die with a mortgage. And it’s important to think about it. If you understand your options, you can help to protect the people - and the place - that matter most.

In this guide, we explain:

In most cases, a mortgage doesn’t disappear when someone dies. It still has to be repaid, because the loan is attached to the property - not the person.

Your mortgage lender will expect the remaining balance to be settled. This could be done using:

It’s important to think about your mortgage and death. Planning ahead can make things much easier for your loved ones when you’re not around to support them.

What happens to a mortgage when you die depends on your situation:

The surviving partner is usually responsible for maintaining the mortgage payments. That’s because most joint mortgages are set up so that both people are ‘jointly and severally liable’.

That means a lender can ask for a debt to be settled by any one of the two homeowners or both of them together.

The responsibility of paying off your mortgage passes to your estate. That’s everything you own when you die.

Your family or the executors of your estate will need to arrange repayments until:

This can sometimes create financial pressure at an already difficult time. That’s why many people choose life insurance to help protect their home.

Life insurance can help your loved ones to manage the mortgage after you die by paying out a cash lump sum. They can use this to:

Tesco Life Insurance offers two types of cover suitable for mortgage protection:

It’s important to remember that life insurance is protection, not an investment. When your policy term ends, so does your cover. And you won’t get any money back.

Level term life insurance pays out a fixed lump sum if you die during the policy term. Many policies also include terminal illness, which means the cover can pay out early if you’re diagnosed with a terminal condition and aren't expected to live longer than 12 months.

This type of cover might be suitable for:

Level cover can help to support your family financially after you’ve gone, especially if you have children. Because of this, level term life insurance is also called Family Protection.

You can learn more about Family Protection in our guide - What is level term life insurance?

Decreasing term life insurance is designed with mortgages in mind. It’s commonly taken out to cover a repayment mortgage, where the amount you owe reduces over time.

Cover usually lasts as long as your mortgage. And the cover amount normally goes down in line with your mortgage as you pay it off.

The payout is closely linked to the outstanding balance on your mortgage. So it can help to pay off your mortgage if you die during the policy term or if you’re diagnosed with a terminal illness during the policy term and aren't expected to live longer than 12 months.

You can learn more about mortgages and life insurance in our guides:

What is decreasing term life insurance?

Do you need life insurance for a mortgage?

Your lender will probably want you to have life insurance in place when you take out a mortgage with them.

If you die with a mortgage and no life insurance, your loved ones might need to:

In the worst-case scenario, your lender might eventually repossess your home if:

and

That’s why many people choose life insurance that pays off a mortgage if you die. So the family that’s left behind aren’t left in financial difficulty.

What happens when you die with equity release or a lifetime mortgage is a bit different.

The loan usually needs to be repaid when the last homeowner dies or moves into long term care. This is normally done through the sale of the property.

A reverse mortgage is similar to equity release. In this case, the mortgage needs to be repaid from the sale of the property. That is, unless the family members choose to repay the debt themselves.

If your family want to keep the home, they can pay off the mortgage using a life insurance payout or other funds.

Ownership of your home is transferred according to your will, or the rules of intestacy if you don’t have one.

A beneficiary may inherit the property - but not automatically inherit the mortgage.

They’ll usually need to:

This process is sometimes called transferring a mortgage after death.

Here are some simple steps your family or executors might need to take if you die and leave a mortgage behind.

1. Tell the mortgage lender about the death

2. Continue payments if possible, to avoid arrears

3. Check for life insurance policies

4. Submit a claim to the insurer

5. Look at the estate’s finances to decide how the mortgage will be repaid

6. Seek financial or legal advice if needed

Having life insurance in place can make these steps much easier.

Tesco Life Insurance can give your loved ones a tax-free lump sum to help pay off your mortgage if you die. This can help to protect their home during a difficult time.

Tesco Life Insurance is a term life insurance policy, which means cover lasts for the length - or term - of the policy.

When you take out a policy, you can choose:

The policy pays out if one of the following happens during the policy term:

or

You can learn more about life insurance in our guide - What is life insurance?

We’ve also got a jargon buster explaining some of the key terms - Life insurance glossary.

Whatever cover you choose, the most important thing is having the right protection in place for the people who matter to you.

Tesco Life Insurance makes it easy to compare options. So you can pick the cover that suits your life, your finances, and your future.

At Tesco Insurance, we want to help you with the things that matter most. That’s why Tesco Life Insurance comes with a Big Win and lots of Little Helps.

As well as your Tesco benefits, you’ll also get health and wellbeing benefits from Aviva.

Tesco Life Insurance is provided and administered by Aviva, who have a 5-star Defaqto rating for life insurance and pay out on 98.7% of claims*.