Loan After Passing Away

[magic]

If the home loan is in the husband and wife's name and the husband passes away, what happens to the loan, does it need to be repaid immediately in full or can the wife continue to have the loan and continue to make repayments?

 

[D.T.]

Depends on the will. One name on the title or both?

 

[Aaron_C]

Well assuming the property is transferred into the wife's name the loan will have to be refinanced.

 

[Terry_w]

If the home loan is in the husband and wife's name and the husband passes away, what happens to the loan, does it need to be repaid immediately in full or can the wife continue to have the loan and continue to make repayments?

Depends...

If the property is held joint tenants then the survivor will automatically inherit. The mortgagee will probably just allow the loan to keep going without the survivor being reassessed.

If the property is held as Tenants in Common then each owners share could be willed to anyone. If the share of the property is left to someone other than the spouse then the loan will need to be paid out or re-applied for. If it is the surviving spouse that inherits then the mortgagee will probably just let the loan keep going.

If the will is silent about how any loan secured by the property is to be repaid then it comes out of the property - in NSW this legislation is in the Conveyancing Act.

eg. You own a property and have 3 kids. You leave one kid $500,000 cash and the 2nd kid a $500,000 property and the 3rd kid $1mil worth of shares with a $500,000 debt - but the debt is secured by the property and not the shares. Guess which kid gets nothing? The one that gets the property (NSW anyway)

 

[Tyla]

Depends...
eg. You own a property and have 3 kids. You leave one kid $500,000 cash and the 2nd kid a $500,000 property and the 3rd kid $1mil worth of shares with a $500,000 debt - but the debt is secured by the property and not the shares. Guess which kid gets nothing? The one that gets the property (NSW anyway)

Is that because $500k debt was secured against the property? What if it is 500k margin loan against shares?

 

[Terry_w]

Is that because $500k debt was secured against the property? What if it is 500k margin loan against shares?

Yes. Unless specified in the will any debt secured by property/shares is payable from the property/shares.