Your mortgage doesn't disappear when you die
When you die with a mortgage, the debt doesn't vanish — it becomes a liability of your estate and the lender can require the home to be sold if it isn't repaid. Two tools solve this together:
- Life cover to clear the mortgage — decreasing term assurance is designed to pay off the outstanding balance on death.
- A Will — to direct who inherits the home and to appoint executors and (if you have children) guardians.
A life policy written in trust pays out directly to your chosen people, bypasses probate so the money arrives quickly and falls outside your estate — so it's free of the 40% inheritance tax. This matters most when the payout is meant to clear a mortgage.
What can go wrong without planning
- No life cover — the family home may have to be sold to repay the mortgage.
- A policy paid into the estate (not in trust) can be delayed by probate and taxed at 40%.
- No Will — the intestacy rules decide who inherits and an unmarried partner may get nothing.
- Young children inheriting a home or payout outright at 18, with no guardians of your choosing.
If you leave a mortgaged home in your Will, who pays the loan?
Unless your Will says otherwise, the person who inherits a mortgaged property takes it with the mortgage attached. Section 35 of the Administration of Estates Act 1925 puts the debt on the property itself, not on the rest of your estate. So if you leave your flat to your sister and your savings to your son, your sister inherits the flat and the loan secured on it.
That can surprise families. A few points are worth knowing:
- You can change the default. Your Will can direct that the mortgage is paid from the residue so the home passes free of the debt.
- Life cover written in trust pays the people you named in the trust, not your estate. Check they match the people inheriting the home. Otherwise the cash and the debt can end up in different hands.
- Interest keeps running after death. Lenders usually allow executors time to sort things out, but the beneficiary may need to take over payments, remortgage in their own name or sell.
For couples buying together, see Wills after buying a house.
How ClearLegacy helps
Life cover and a Will are two halves of protecting a mortgaged home. ClearLegacy handles the Will side: who inherits the property, who your executors are and — if you have children — guardians and the age they inherit. Pair it with mortgage life cover written in trust and your family is protected.
- Direct who inherits the home.
- Appoint executors and guardians for children.
- Use a Will trust so children inherit at an age you choose.
- Fixed £69, usually delivered within 24 hours, legally valid in England & Wales.
Protect the home your family lives in
Fixed price, legally valid in England & Wales, usually delivered within 24 hours.
Make my Will — £69FAQs
What happens to my mortgage when I die?
The mortgage is a debt repaid from your estate. If it isn't cleared — for example by life insurance — the lender can require the property to be sold. Owning as joint tenants passes the home to the survivor, but the loan still has to be serviced or repaid.
Should my mortgage life insurance be written in trust?
Usually yes. A policy written in trust pays out directly to your beneficiaries, avoids probate delay and falls outside your estate so it's free of the 40% inheritance tax — important when the payout is meant to clear a mortgage for your family.
Do I need a Will as well as mortgage life cover?
Yes — they do different jobs. Life cover clears the debt; a Will decides who inherits the home, appoints executors and (for parents) guardians and ensures your partner is provided for. Together they protect the home and the people in it.
