What happens to mortgages when a landlord dies?Make Text Bigger
I wrote an article a few weeks ago about a conversation I’d had with a financial advisor about what happens to mortgages when a landlord dies. I didn’t think it would be a very popular article as it’s quite a morbid subject and none of like to think too much about death do we? I was very wrong!
As landlords, our properties and the potential for them to generate rental income are pretty certain to outlast us. However, the feedback I received from my article really got me thinking. I also had an approach from an insurance brokerage which provides advice to landlords on the whole of the insurance market. They had designed a really cool calculator which works out the chances of surviving to the end of your buy to let mortgages based on official mortality rates. I tried this and so did a few of my landlord friends, after which we all agreed to go to the pub, have a few beers and drown our sorrows. Sod it we thought, we might as well go now as we don’t fancy our chances based on the results from this bloody calculator. If we don’t make it back the kids can pick up the tab LOL.
Seriously though, this got me thinking through a few what if’s:-
- Would our mortgage lenders just transfer the mortgage to my beneficiaries? Probably not!
- Would there be enough equity in the properties for my beneficiaries to refinance them? I don’t really know!
- Would the rental income be enough to satisfy the lenders criteria to refinance if interest rates went up? Depends!
- What would be the cost of refinancing?
That’s when I first decided to build a calculator of my own. One which would work out a ball park figure for the minimum life insurance a landlord might like to consider buying.
The bar was great fun by the way, much more so than playing with the calculator, but as I sat recovering from the hangover the next day, realising I wasn’t dead and that I’m definitely not immortal, I decided to review my own arrangements. Result, my other half is very impressed, time to use up those credits I feel. Right, I’m off to speedway!
Related articles in this series
You are here >>> Part two – What happens to mortgages when a landlord dies?
Part three – Barry’s story – it could have been you!
Part five – Financial Advice – how do you pick an adviser?
Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.