Refiancing deceased estate

[ColonialBoy]

A close relative recently passed away & left me and my sister with a house with a reverse mortgage.

The issue is how to refinance the reverse mortgage given my sister & I are not in full time employment. I'm am currently at uni & my sister is a nurse who was the full time carer of the deceased relative. My sister and I are executors of the estate.

Basic Information:
House: In SE Queensland, huge 1700 sq m block of land, 60 old house but structurally sound
Reverse Mortgage: $114K
Unimproved capital value: $128K

Myself: due to complete uni in June this year, becoming a math/science teacher, should find work in July. $8K cash savings
Sister: nurse who has not worked in years, has just started job hunting for any job.

This is a very modest mortgage but given out current employment circumstances we probably need 6 months leeway to get jobs to qualify for a loan. I'm in a bit of a panic because we don't want to lose the house.

Q1. The reverse mortgage is payable at the death of the mortgagor. How does the mortgagee know about that, do they scan papers for funeral notices, or wait til settlement etc? I want to stop the mortgagor knowing about this for as long as possible, and delay settlement of the estate for as long as possible.
Q2. We don't want a valuer inside as the loan is below UCV. The house is full of rubbish & "old lady stuff" that needs cleaning out.
Q3. Can two people currently on centrelink qualify for a $112K loan? Seems a long shot.

 

[Terry_w]

Does the will specify how the loan is to be dealt with? eg. it may be paid for with other money from the estate? If not then it is likely the loan sticks with the house

As executors you would be duty bound to tell the mortgagee. This is probably once probate is issued, as until then you are not executors. If you are appointed executors then you are the legal personal rep of the deceased and you have to wind up the affairs of the deceased. Call in all monies, pay all loans, do tax returns etc.

You could possibly delay things by delaying the application for probate. But interest would be capitalising on the loan daily. Soon the loan would be more than the value.

If you want to get a loan so you can pay out the loan of the deceased then all the normal rules will apply. LVR, serviceability etc.

Based on what you have said you would not qualify for a loan.

You should read the terms of the reverse mortgage loan agreement carefully and seek legal advice.

 

[alexlee]

You should read the terms of the reverse mortgage loan agreement carefully and seek legal advice.

Get legal advice on this. You may be breaking other laws by not telling the lender of the death. There might be legal ways of delaying probate? Though as Terry said interest is still accumulating and your problem gets bigger the longer you delay.

 

[tobe]

Q3, maybe, there are a couple of lenders who use centrelink payments as assessable income, it also depends on what other liabilities you have, and whether the purpose is PPOR or IP.

Its not a refinance by the way, more of a purchase, as the title will need to be in your names first. To do this, it needs to go through probate etc, which can take some time. Its possible, but dificult.
Id be speaking to the reverse mortgage provider and being upfront with your intentions and see if they can provide a solution. Start anonomously if you like, with a proposed scenario, 'if my parent dies, how can I refinance the mortgage being the exectuor and benificiary? etc'