What happens to your mortgage if your partner passes away?
Every life comes to an end. Unfortunately, this moment can come in the prime of your life. If it happens, how will your partner be left behind financially? Coping with the emotional consequences is difficult enough. The last thing you wish for is for your partner to remain in financial difficulties. Especially if you own a house, you can take action now to ensure everything is managed financially.
When you buy a house together, you often do that for the long term. The idea of something happening to your partner passing away is unthinkable. However, it is wise to think about this scenario together. Preparing well-informed can prevent financial worries in a difficult time and ensure you leave each other in good standing.
On this page
Property in the inheritance
Suppose you are married or have a registered partnership, and your partner passes away. In that case, according to statutory inheritance law, you usually inherit their share of the property, including its mortgage debt. (For completeness, your children also receive a share through a claim.) You may have made other arrangements in your will. Reviewing your will and any other formal arrangements you have made together is wise.
If you are cohabiting, you only inherit from each other if this is stated in your will. Your cohabitation agreement may also include a survivorship clause. You can continue living in the house but may not fully own the property.
Survivor’s benefit
If you inherit your partner’s property, it becomes yours. However, you still need to pay the mortgage on it. Whether you can afford the mortgage depends on your income and savings at that time. Often, a survivor’s pension from your partner’s employer or life insurance is in place. You may also be entitled to a benefit under the Algemene nabestaandenwet (Anw). The benefit is a maximum of 70% of the net minimum wage.
Are the monthly payments too costly for you? We can help find a solution. Depending on your situation, part of the mortgage may be converted into an interest-only loan, or the monthly payments can be lowered by extending the duration of the mortgage. Ideally, these scenarios were already considered in the original mortgage advice, ensuring the affordability of the mortgage in several scenarios.
Survivor’s pension explained
If you are employed, you are often (but not always!) entitled to a survivor’s pension through your employer. This ensures a monthly payment to the surviving partner and children under 21 in the event of death, provided your partner is registered with the pension fund or the insurer. On mijnpensioenoverzicht.nl, you can check what your partner is entitled to.
Note: A survivor’s pension is often an insurance paid by the employer. If you leave your job and don’t immediately have a new employer, the coverage for the survivor’s pension may be lost.
Lower costs due to insurance policy
We often recommend taking out life insurance. The payout can cover mortgage payments or repay part of the mortgage. This ensures that you or your partner can keep residing in the home even though the mortgage would be too expensive on your own. This insurance is often taken out alongside a mortgage, and your adviser will advise you on available options.
Partners usually take out life insurance crosswise to avoid inheritance tax upon payout. The monthly premium is often relatively low, especially if you are young and healthy. Typically, there is a penalty if you repay a large portion of your mortgage, but in this case, an exception applies, and the penalty does not apply.
Check your policy
Do you already have life insurance? Check if the beneficiary designation and payout amount still match your current situation. If you took out the insurance when you arranged your mortgage, it might be pledged (verpand) to the mortgage. This means the payout must be used to repay the mortgage. You can ask the lender to release the pledge. This can sometimes be attractive because the surviving partner can use the payout freely.
Checklist
- Check your survivor’s pension
- Check the insured amount of your current life insurance
- Verify the beneficiary designation of your life insurance
- Consider removing the pledge from your insurance policy
No partner, but have a mortgage?
What about your mortgage if you don’t have a partner? Your heirs – your children, brother, sister, or parents – inherit the property and the mortgage debt. If they accept the inheritance and thus become the property owner, they must also pay the monthly mortgage costs or sell the house. (They will also pay inheritance tax on the house’s net value.) If a term life insurance policy is linked to the mortgage, the mortgage can be partially or fully repaid with the payout.