Co-owner of my house died without life insurance

dmg11234

Hi, I am looking for some advice while waiting to see a solicitor. I don't really know where to post this..

My fiance died in April suddenly aged 25. We bought our house together in March 2009. He did not have life insurance, he couldn't get it as he had a heart condition which meant no insurance company would insure him. We tried everything at the time and afterwards

He died in April and I am not sure where I stand now. Do I take on the full mortgage myself? If somebody does not have life insurance, and they own a house and they die, what generally happens? What would have happened to the debt if he owned the house by himself?

I know I need legal advice about this and that is the next step. But I am just confused right now as to where I stand with my house

Any advice would be appreciated, google is so confusing..

Thanks

Liam D Ferguson

Very sorry to hear of your loss.

Assuming that you bought the house jointly and got a joint mortgage, then technically it's up to you to continue the repayments on the mortgage. If you can't do this, then you can negotiate with the lender to come to an arrangement that you can afford.

As you bought in 2009, I'm guessing that the house is now worth less than what you paid for it. Are you in negative equity, i.e. is the mortgage amount greater than the value of the house? If so, then there should be no inheritance tax issues as you're only inheriting a loan. If the house is worth more than the mortgage, then you will effectively be inheriting your fiancee's half and there may be a tax issue as you weren't married, but there may not - a lot depends on the amounts involved. Your solicitor can talk you through that.

dmg11234

Liam D Ferguson wrote: »

Very sorry to hear of your loss.

Assuming that you bought the house jointly and got a joint mortgage, then technically it's up to you to continue the repayments on the mortgage. If you can't do this, then you can negotiate with the lender to come to an arrangement that you can afford.

As you bought in 2009, I'm guessing that the house is now worth less than what you paid for it. Are you in negative equity, i.e. is the mortgage amount greater than the value of the house? If so, then there should be no inheritance tax issues as you're only inheriting a loan. If the house is worth more than the mortgage, then you will effectively be inheriting your fiancee's half and there may be a tax issue as you weren't married, but there may not - a lot depends on the amounts involved. Your solicitor can talk you through that.

Thank you very much for your answer. Inheritance tax is something that I've been worried sick about. Yes we took out the mortgage jointly. I am not sure how to find out whether I am in negative equity but I assume I am. Do you mean I may have to pay tax on my 'inheritance' even though all I am inheriting is debt itself and my own house?

Thanks again

Dempo1

I'm sorry to hear about your loss.

Firstly, I had close friends who purchased a house a number of years ago, in a similar situation as yours, they were engaged but the male had cystic fibrosis and not unlike your situation he was unable to obtain life assurance, sadly he since passed away.

However, this said, there is a legal requirement to have mortgage protection insurance on all mortgages and i assume you both had this on the mortgage. Whilst not a legal expert, i assume this protection insurance should kick in. There is usually a life cover aspect of Mortgage protection insurance and i would advise you review your Policy prior to meeting your solicitor.

Liam D Ferguson

Dempo1 wrote: »

However, this said, there is a legal requirement to have mortgage protection insurance on all mortgages and i assume you both had this on the mortgage.

In this context Mortgage Protection is a form of life insurance policy. If the OP's fiancee couldn't get life insurance because of his heart condition, then that would also mean that he couldn't get Mortgage Protection. (Mortgage Repayment Protection is optional cover that protects your repayments in the event of illness or redundancy, but that's a different product altogether.)

There is a legal requirement for any customers under 50 obtaining a mortgage to buy a family home to obtain Mortgage Protection life insurance. But if they can prove that they cannot get life insurance at a reasonable rate, the lender has discretion to waive this requirement and proceed without it. It sounds like the lender did this in this instance.

Liam D Ferguson

dmg11234 wrote: »

I am not sure how to find out whether I am in negative equity but I assume I am.

Find out what the value of your house is now - have a look for similar houses on www.daft.ie or www.myhome.ie to get a general idea. Then find out from your lender how much is now outstanding on the mortgage.

dmg11234 wrote: »

Inheritance tax is something that I've been worried sick about....Do you mean I may have to pay tax on my 'inheritance' even though all I am inheriting is debt itself and my own house?

No. If you owe more than the value of the house, there's no Inheritance Tax to worry about. Say, for example, the house was worth €250,000 in April and the mortgage balance was €260,000 at that time, then you have inherited nothing taxable.

Dempo1

Liam D Ferguson wrote: »

In this context Mortgage Protection is a form of life insurance policy. If the OP's fiancee couldn't get life insurance because of his heart condition, then that would also mean that he couldn't get Mortgage Protection. (Mortgage Repayment Protection is optional cover that protects your repayments in the event of illness or redundancy, but that's a different product altogether.)

There is a legal requirement for any customers under 50 obtaining a mortgage to buy a family home to obtain Mortgage Protection life insurance. But if they can prove that they cannot get life insurance at a reasonable rate, the lender has discretion to waive this requirement and proceed without it. It sounds like the lender did this in this instance.

This is a surprise, i was under the impression all mortgages had to be protected by a MPP with it having a life assurance aspect to it. Much the same as any household with a mortgage Redundancy, critical illness policies are not obligatory and are normally separate policies cover etc. I just checked my own policy which does have life cover however i had to take out a separate policy for redundancy, payment protection etc which turned out to be as useless as a three legged hamster. I would be genuinely surprised if the OP's mortgage was not covered by Mortgage protection and having some life cover attached. Perhaps I am wrong.

Liam D Ferguson

Mortgage Protection life insurance is obligatory. In a majority of cases, it's usually a decreasing cover life insurance policy. Mortgage Protection is just a marketing name. It's just a type of life insurance policy. If you can't get life insurance for health reasons, that means you can't get Mortgage Protection. In this instance, you have to go back to your lender and ask them to consider waiving the requirement for life insurance.

You can add on optional benefits to a Mortgage Protection life insurance policy, e.g. specified serious illness cover but they're just optional.

Mortgage Repayment Protection cover is always optional, always a separate policy and, in my view, always of debatable value.

Dempo1

Liam D Ferguson wrote: »

Mortgage Protection life insurance is obligatory. In a majority of cases, it's usually a decreasing cover life insurance policy. Mortgage Protection is just a marketing name. It's just a type of life insurance policy. If you can't get life insurance for health reasons, that means you can't get Mortgage Protection. In this instance, you have to go back to your lender and ask them to consider waiving the requirement for life insurance.

You can add on optional benefits to a Mortgage Protection life insurance policy, e.g. specified serious illness cover but they're just optional.

Mortgage Repayment Protection cover is always optional, always a separate policy and, in my view, always of debatable value.

Thanks Liam, i am just surprised about this, I would have thought that without being able to obtain life cover on the MPP, it would be highly unlikely a mortgage would be granted to the applicant in the first place.

Liam D Ferguson

Dempo1 wrote: »

Thanks Liam, i am just surprised about this, I would have thought that without being able to obtain life cover on the MPP, it would be highly unlikely a mortgage would be granted to the applicant in the first place.

The lender has discretion to refuse or approve the loan if life cover can't be obtained. In my view, they should turn down an application if the partner who can't get life cover is a contributor to the mortgage. If the person with no life cover is a non-earning partner, I can understand the logic of going ahead with the loan anyway. But otherwise no. Then again, Irish lenders aren't renowned for prudent decision-making.

Dempo1

Liam D Ferguson wrote: »

The lender has discretion to refuse or approve the loan if life cover can't be obtained. In my view, they should turn down an application if the partner who can't get life cover is a contributor to the mortgage. If the person with no life cover is a non-earning partner, I can understand the logic of going ahead with the loan anyway. But otherwise no. Then again, Irish lenders aren't renowned for prudent decision-making.

Too true, this insurance lark is bizzare at times. Off Topic a little, I decided to shop around for house insurance having been with the mortgage providor for nearly 10 years with outrageous premiums. Saved almost 300 in year one but then discovered something quite bizzare. Being cheeky i decided to see if I could save again. Humble cottage, no risks, flooding etc, not a single claim but on putting in the details of when the house was Built (Circa 1801) I was gobsmacked to learn few if any companies will insure a house of this age. So I'm stuck with 123.ie who in fairness do offer competitive rates.

As for Mortgage protection, currently paying 55 per month on a mortgage of 65k, it does have decreasing life cover. I can get this coverage for 16 a month elsewhere but the amount of form filling etc required is mind boggling plus medicals etc.

Liam D Ferguson

Dempo1 wrote: »

Off Topic a little, I decided to shop around for house insurance having been with the mortgage providor for nearly 10 years with outrageous premiums. Saved almost 300 in year one but then discovered something quite bizzare. Being cheeky i decided to see if I could save again. Humble cottage, no risks, flooding etc, not a single claim but on putting in the details of when the house was Built (Circa 1801) I was gobsmacked to learn few if any companies will insure a house of this age. So I'm stuck with 123.ie who in fairness do offer competitive rates.

Some of the smaller specialist household insurance brokers can insure older houses, e.g. www.pike.ie I'm told that AA Insurances can also do this.

Dempo1 wrote: »

As for Mortgage protection, currently paying 55 per month on a mortgage of 65k, it does have decreasing life cover. I can get this coverage for 16 a month elsewhere but the amount of form filling etc required is mind boggling plus medicals etc.

I know that there can be quite a difference between companies for life insurance costs, but the gap between €55 and €16 is too high to be just an uncompetitive company. Either your €55 policy has extra benefits that the €16 quotes doesn't, e.g. specified serious illness cover, or there was some loading for health issues, occupation etc.

Incidentally, any broker doing a lot of life insurance should have electronic application facilities in the office. You answer the questions over the phone and then the broker generates an application form for you to sign, that's fully-completed.

A medical would be very unlikely at 65,000 cover unless there's a specific medical issue.

Dempo1

Liam D Ferguson wrote: »

Some of the smaller specialist household insurance brokers can insure older houses, e.g. www.pike.ie I'm told that AA Insurances can also do this.



I know that there can be quite a difference between companies for life insurance costs, but the gap between €55 and €16 is too high to be just an uncompetitive company. Either your €55 policy has extra benefits that the €16 quotes doesn't, e.g. specified serious illness cover, or there was some loading for health issues, occupation etc.

Incidentally, any broker doing a lot of life insurance should have electronic application facilities in the office. You answer the questions over the phone and then the broker generates an application form for you to sign, that's fully-completed.

A medical would be very unlikely at 65,000 cover unless there's a specific medical issue.

Thanks for that, there is not major additional items covered on existing Policy, there is life cover but presumably this is the norm, I will take a look at the site details you mentioned, much appreciated!

shopaholic01

Liam D Ferguson wrote: »

In this context Mortgage Protection is a form of life insurance policy. If the OP's fiancee couldn't get life insurance because of his heart condition, then that would also mean that he couldn't get Mortgage Protection. (Mortgage Repayment Protection is optional cover that protects your repayments in the event of illness or redundancy, but that's a different product altogether.)

There is a legal requirement for any customers under 50 obtaining a mortgage to buy a family home to obtain Mortgage Protection life insurance. But if they can prove that they cannot get life insurance at a reasonable rate, the lender has discretion to waive this requirement and proceed without it. It sounds like the lender did this in this instance.

This is correct, and also it is possible to cancel your mortgage protection after the mortgage is drawn down. The insurer will inform the mortgage company but they can't force you to reinstate cover - it is only necessary to draw down the mortgage. Mortgage companies will accept cases where someone cannot obtain cover, however the consequences should have been explained to the OP. Usually a clause will be included in the paperwork sent to the client and the solicitor, and the solicitor should have explained this fully to the OP and her fiance prior to signing and drawing down the mortgage.

Sorry for your loss, Op, I hope it all works out for you.

sarkozy

shopaholic01 wrote: »

This is correct, and also it is possible to cancel your mortgage protection after the mortgage is drawn down. The insurer will inform the mortgage company but they can't force you to reinstate cover - it is only necessary to draw down the mortgage. Mortgage companies will accept cases where someone cannot obtain cover, however the consequences should have been explained to the OP. Usually a clause will be included in the paperwork sent to the client and the solicitor, and the solicitor should have explained this fully to the OP and her fiance prior to signing and drawing down the mortgage.

Sorry for your loss, Op, I hope it all works out for you.

To my knowledge, this is only possibly if the Terms and Conditions of your loan offer permit this. I think ours is explicit in requiring fire cover and mortgage protection to be in place for the duration of the loan period.

shopaholic01

sarkozy wrote: »

To my knowledge, this is only possibly if the Terms and Conditions of your loan offer permit this. I think ours is explicit in requiring fire cover and mortgage protection to be in place for the duration of the loan period.

I was told by a mortgage broker that you have to have mortgage life cover in place prior to drawing down a mortgage (legal requirement). If you cancel it the mortgage company can't force you to reinstate it - a lot of people are now doing this to save costs. In reality, this is only advisable if you are single, best for couples to have joint cover if possible. If one/both die without cover, the mortgage company would simply apply to the courts and become the legal owner of the property. They retain the deeds until the mortgage is fully repaid.

Home insurance is still necessary, and mortgage companies will insist on this, otherwise the debt would be unsecured if the house is is damaged in fire etc. The insurance company will send you a certificate to forward to your mortgage provider upon renewal.

Liam D Ferguson

shopaholic01 wrote: »

If you cancel it the mortgage company can't force you to reinstate it - a lot of people are now doing this to save costs.

If the lender has an assignment over your life policy, they can refuse to permit you cancel it in the first place. If there is an assignment noted the life insurance company won't accept your instructions to cancel without also having the lender's written agreement.

shopaholic01

Liam D Ferguson wrote: »

If the lender has an assignment over your life policy, they can refuse to permit you cancel it in the first place. If there is an assignment noted the life insurance company won't accept your instructions to cancel without also having the lender's written agreement.

Is this new? I was definitely told by a broker it was possible, must check my mortgage docs to see if this applies.

Liam D Ferguson

shopaholic01 wrote: »

Is this new? I was definitely told by a broker it was possible, must check my mortgage docs to see if this applies.

The idea of a bank taking an assignment over a life insurance policy and thus having a say over anything that happens to it isn't new. But some lenders didn't bother taking assignments, particularly during the boom years. Since the party ended, I've noticed that most lenders are now returning to the practice of taking an assignment again.

greenbicycle

Just to use myself as an example, me and my husband have recently gotten a mortgage and they waived the life assurance condition for me as i was refused it becuause of a recently diagnosed condition (which is in no way life threatening!)

I only applied with the bank we are getting the mortgage from.

I do however have a death in service benefit in work which helped them waive it i think. But who is to say i wont leave that job next month?

I am going to apply for life assurance through a broker however as i think it is very important.just didnt get to do it before the condition was waived it happened that quick...

OP i really hope things work out for you in terms of the mortgage. This is the last thing hou want to think about at this time im sure. I was very sad for you reading your post.