What happens a mortgage when a person dies?

mf1 said:

What happens a mortgage when a person dies?

Post 13 above

She can't get a mortgage - maybe age, income?

mf

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Fair enough but I suppose it was really a rhetorical question - if another lender will not advance the required amount to Mary (due to her age, income or any other factor) then it seems illogical to assume that she can afford to take on the deceased's mortgage (due to any of the same factors).

In any event, it is not legally possible to simply assume the liabilities of a deceased person. The original debt would be deemed to crystallise on the demise of the original borrower. For Mary to occupy the same economic position of the deceased, the lender would have to agree to treat the original loan as having been discharged and agree to Mary taking the place of the original borrower in what would, legally, constitute a new loan arrangement with a new mortgage, etc. This would be the case with any lender.

In relation to whether the mortgage is a charge on the residue …

Liabilities connected with non-residuary gifts are only deductible as a charge on the residue if they fall exclusively or primarily on the residue.

Mary inherited the property as a specific disposition and as a non-residuary beneficiary. The mortgage is, therefore, not a charge on the residue.

If instead, she had inherited the residue including the property, then the mortgage would be deductible from the residue – TCA 1997 s 799.

I don't think anybody suggested that the bank has a charge on the residue but rather that it is entitled to pursue any outstanding loan balance (having realised its security on the charged property) from the residue of the estate. The bank's security interest is not enhanced (or diminished) by the death of the borrower.

..it is entitled to pursue any outstanding loan balance (having realised its security on the charged property) from the residue of the estate..

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On the information given, in this case, the value of the property far exceeds the mortgage. Based on mf1's earlier post as this is a solvent estate the mortgage attaches to the property.

Thirsty said:

On the information given, in this case, the value of the property far exceeds the mortgage. Based on mf1's earlier post as this is a solvent estate the mortgage attaches to the property.

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The statute is absolutely clear that the lender can pursue the balance (if any) of the outstanding loan from the residue of the estate. If the realised value of the property, less all relevant costs, is sufficient to discharge the loan then the issue is moot. Nobody is arguing that the mortgage does not attach the property.

Just on the issue of having insurance on a mortgage. My sister got a mortgage and because she was over 50 years old she was given the choice. Your not forced to have one.