Throughout our lives, we strive to achieve certain goals, one of which is to buy a comfortable house for us and our loved ones. Now consider, that a person has taken a home loan to purchase a residential property, however, he/she passes away, before the loan is completely repaid, what happens next? If the borrower had planned beforehand to protect the interests of those he/she survived, then repayment of the loan can be handled easily.
It is important that the borrower must prepare a will of inheritance for the property during his/her lifetime to safeguard against any legal issues that may arise after he/she passes away. Laws do let a widow who is financially stable, transfer the mortgage loan in her name, in case the amount balance towards the loan need not be paid on the borrower’s death.
Check for Free: Home Loan Eligibility Calculator
What is the Role of an Executor and Heir of a Mortgaged Property?
Though the property inheritors will own the mortgaged property on the borrower’s death, they are legally not bound to make the loan repayment always. Though an heir, usually a family member, has all the legal rights to the borrower’s money, he/she cannot decide on the mortgaged property. It is the executor who is legally empowered with administrative powers over the borrower’s property.
It is also important to know that both the executors and legal heirs can be decided from amongst the family members; especially it is a big family. Here, the executor can arrange for the payment of the balance debt by selling off the property. The money remaining after payment towards the housing loan can then be divided between the heirs.
One can even decide to remortgage the property. In case of any disagreement between the heir and the executor, the court will have the final say. The borrower must ensure appointing an executor, failing which his/her dependents may have a tough time in the court of law when it comes to a mortgaged property, the family members or relevant others are inheritors.
Use our Free Financial Tool: Home Loan EMI Calculator
Things the Borrower Must Do Concerning the House He/She Owns
- It is very essential for the borrower to make a proper will in writing so that the property gets transferred to his/her loved ones.
- The appointment of a responsible executor shall ensure proper management of the assets without creating any hassles.
- Discuss with the heirs about all the legal and financial aspects of the property.
- Let them know that the lender shall by no means hand over the property to them if they do not inherit the mortgage.
- The heirs must be told to contact the lender on his/her (borrower’s) death, with all relevant documents.