I took out my mortgage later in life. It is in my name only and I’ve just discovered that if I were to die before my wife, whom I recently married, she would be homeless as the mortgage would have to be paid up.
The property is worth £650,000, and I owe £300,000 on the mortgage. I have a good pension, so paying the £220 monthly repayments is not a problem. My wife would also be able to continue paying that amount if I were to die first.
What should we do?
The first point is that even if you do nothing about your current mortgage, your wife would not be homeless. If your executor had to sell your home to repay the mortgage, your lender would almost certainly allow a reasonable time to do this – at least six months and possibly a year if necessary. Your wife would then have sufficient funds to buy another home.
However, as you now recognise the problems which your wife would face if you die first a far more sensible approach would be to make changes now to mitigate the undoubted stress your wife would be under should you die first.
You should tell your lender you intend your wife to become a joint owner of your home (technically known as a transfer of equity) and ask if it would be prepared to add her to the mortgage, which it is unlikely to refuse to do. By making her a joint owner, not only will the mortgage not need to be repaid on your death,but it will make the administration of your estate much easier. The property would pass solely to your wife if you two own the property as ‘joint tenants’.
With this type of joint ownership, the whole property reverts to the survivor on the first death.
Your home would pass to your wife if you own it as joint tenants
An alternative is to own it as ‘tenants in common’, which allows each person to state in their will how their share should be dealt with.
You should get legal advice on this. It may also be wise to get independent finance advice on other related inheritance issues.
If your lender won’t allow your wife to be added to the mortgage, or if your current mortgage is not competitive, you could consider remortgaging.
The Financial Conduct Authority has recently authorised a new type of mortgage, called retirement interest-only, which means more options for older people are coming on to the market. Click here for details of how it works and current providers.