Equity Release After the First Death
What Happens to Equity Release When the First Partner Dies?
If a lifetime mortgage is in joint names, it will not normally have to be repaid when the first partner dies. The surviving borrower can usually continue living in the property under the existing terms of the plan. Repayment would normally become due when the last surviving borrower dies or permanently moves into long-term care.
Written by Simon Oliver, Equity Release Expert at My Later Life
The Most Important Point to Understand
Losing a husband, wife or partner can be difficult enough without also worrying about whether you will have to sell your home.
For a joint lifetime mortgage, the usual position is straightforward. When the first borrower dies, the surviving borrower remains on the plan and can normally continue living in the property.
The Equity Release Council explains that where a plan is held in joint names, the surviving partner can continue living in the property under the same terms. If the plan is only in one person’s name, the position can be very different and the property may have to be sold unless the mortgage can be repaid in full.
Read the Equity Release Council guidance on what happens to a partner after death.
First borrower dies → the joint plan normally continues.
Last borrower dies or permanently enters long-term care → the lifetime mortgage normally becomes repayable.
Joint Lifetime Mortgage vs Sole-Name Lifetime Mortgage
| Situation | Joint lifetime mortgage | Sole-name lifetime mortgage |
|---|---|---|
| First borrower dies | Plan normally continues | Plan may become repayable |
| Surviving partner stays in the home | Normally yes, if they are a named borrower | Not automatically |
| Interest continues | Yes, according to the plan terms | Normally until the mortgage is repaid |
| Immediate sale normally required | No | Possibly, if the mortgage cannot otherwise be repaid |
What Happens to a Joint Lifetime Mortgage When One Partner Dies?
Imagine John and Susan own their home together and take out a lifetime mortgage in both names.
Several years later, John dies.
Susan does not normally have to repay the lifetime mortgage simply because John has died. Instead:
- Susan remains the surviving borrower.
- She can normally continue living in the property.
- The lifetime mortgage remains secured against the home.
- Interest continues according to the terms of the plan.
- The mortgage would normally become repayable when Susan later dies or permanently moves into long-term care.
Does the Surviving Partner Have to Leave the Property?
Normally no, provided the surviving partner is a named borrower on the joint lifetime mortgage.
Equity Release Council product standards include a “Home for Life” protection for qualifying plans. This gives customers the right to remain in their property for the rest of their life, or until they permanently move into long-term care, provided the property remains their main residence and the terms and conditions of the mortgage are maintained.
Does Interest Stop When the First Partner Dies?
No. If the plan is a roll-up lifetime mortgage and no repayments are being made, interest will normally continue to be added to the outstanding balance.
For example, if the lifetime mortgage balance is £100,000 when the first partner dies, the balance does not normally freeze at £100,000. If the surviving borrower continues to live in the property and makes no repayments, compound interest may cause the amount owed to increase over time.
The longer the surviving borrower remains in the property, the more important it can be to understand how compound interest may affect the remaining equity and future inheritance.
Can the Surviving Partner Continue Making Repayments?
Potentially, yes. Equity Release Council standards require qualifying lifetime mortgages to give customers the ability to make repayments without charge, subject to lender criteria and the terms of the plan.
- Pay some or all of the interest
- Make occasional capital repayments
- Continue an existing regular repayment arrangement
- Make no repayments and allow interest to roll up
The provider should confirm the exact repayment allowance.
What Happens to a Drawdown Lifetime Mortgage?
If the couple has a drawdown lifetime mortgage, the existing mortgage normally continues for the surviving joint borrower.
However, an unused drawdown reserve should be checked separately. Ask the lender whether the reserve remains available, whether updated information is required and what interest rate would apply to any future withdrawal.
What Happens If One Partner Moves Into Long-Term Care?
If one borrower permanently moves into care while the other joint borrower continues to live in the property, the lifetime mortgage will not normally become repayable simply because the first person has moved into care.
Equity Release Council standards state that customers have the right to remain in their property until they die or permanently move into long-term care, subject to the plan terms. The standards also require an early repayment charge to be waived when a customer permanently enters long-term care where the required conditions and medical certification are met.
What If the Equity Release Is in One Person’s Name Only?
This is where the position can become much more serious.
Imagine David owns the property and has a lifetime mortgage solely in his name. His partner Sarah lives with him but is not named on the lifetime mortgage.
If David dies, Sarah does not automatically become the lifetime mortgage borrower.
The Equity Release Council explains that if a plan is in one name only, then unless the mortgage can be repaid in full, the property may have to be sold and the surviving partner may have to find somewhere else to live.
Being someone’s spouse or partner and living in the property is not the same as being a named borrower on the lifetime mortgage.
What If You Marry or a New Partner Moves In After Taking Equity Release?
The Equity Release Council says the provider should be told if you marry after taking out a plan or if someone later moves into the property as your partner.
It may not always be possible simply to add that person to the existing lifetime mortgage. If they are not added, they may not have the right to continue living in the property if the named borrower later dies or permanently moves into long-term care.
What Happens When the Final Borrower Dies?
The executors or administrators notify the lifetime mortgage provider.
The provider gives the estate an up-to-date repayment figure.
The executors deal with the deceased person’s estate.
This is commonly done from the sale proceeds of the property, although another source of funds may be used.
Any money left after the mortgage and other estate liabilities have been dealt with forms part of the estate.
What If the Lifetime Mortgage Is Worth More Than the House?
Plans meeting Equity Release Council standards include a No Negative Equity Guarantee.
Provided the secured property is sold for the best price reasonably obtainable and the mortgage terms have been met, the borrower or estate will never owe more than the property is worth after reasonable selling costs.
Property sale price: £250,000
Lifetime mortgage balance: £275,000
Where the No Negative Equity Guarantee applies, the estate would not normally have to find the £25,000 difference from unrelated estate assets.
Can the Surviving Partner Move House?
Potentially, yes. Equity Release Council standards require qualifying lifetime mortgage products to give customers the opportunity to transfer their lifetime mortgage to a suitable alternative property, subject to the lender’s criteria at the time of the move.
If the new home is worth less, part of the lifetime mortgage may need to be repaid. Speak to the lender before committing to a sale or purchase.
Five Things to Check After Your Partner Dies
This determines whether you remain a borrower.
Ask the lender for an up-to-date statement.
Check whether you want to control future compound interest.
Ask the provider to confirm any unused reserve.
Review wills, property ownership and inheritance intentions.
How My Later Life Can Help
The death of a partner can change a household’s financial position considerably.
At My Later Life, we can help homeowners understand their existing lifetime mortgage and consider what options may be available.
Where a new lifetime mortgage or later-life mortgage needs to be considered, we can search across suitable lenders and plans available through our service.
We can compare interest rates, fees, voluntary repayment options, drawdown facilities, early repayment charges, inheritance protection, moving-home provisions, property criteria and additional borrowing options.
What Happens to Equity Release When the First Partner Dies? FAQs
What happens to equity release when my husband dies?
If you are both named borrowers on a joint lifetime mortgage, the plan will normally continue and you can usually remain living in the property.
What happens to equity release when my wife dies?
The same principle normally applies. A joint lifetime mortgage usually continues for the surviving borrower.
Do I have to repay equity release when my spouse dies?
Not normally if you are the surviving borrower on a joint lifetime mortgage.
Can the equity release company make me sell my home?
If you are a named surviving borrower and continue to meet the terms of the plan, you can normally remain in the property. The position may be very different if you are not named on the lifetime mortgage.
Does interest stop when one borrower dies?
No. Interest normally continues according to the lifetime mortgage terms until the loan is repaid.
What if my partner was not named on the lifetime mortgage?
The lifetime mortgage may need to be repaid. If it cannot be repaid from another source, the property may have to be sold.
Can my children inherit the house?
Potentially. The lifetime mortgage would normally need to be repaid. If the family can repay it from another source, selling the property may not be necessary.
What happens if I later go into long-term care?
If you are the final borrower and permanently move into long-term care, the lifetime mortgage will normally become repayable.
Need Help Understanding an Existing Lifetime Mortgage?
Speak to My Later Life about what happens to a joint or sole-name lifetime mortgage after the death of a partner, and what options may be available to the surviving homeowner.
Call 0207 100 4255 Explore Your OptionsWhat Happens to Equity Release When the First Partner Dies? The Final Answer
If a lifetime mortgage is in joint names, it will not normally have to be repaid when the first partner dies.
The surviving borrower can generally remain living in the property and the lifetime mortgage continues under its existing terms.
The loan would normally become repayable when the final borrower dies or permanently moves into long-term care.
The position is significantly different where the lifetime mortgage is in one person’s name only. A surviving partner who is not a named borrower may not have an automatic right to remain in the property, and the mortgage may need to be repaid.
At My Later Life, we can help homeowners understand existing lifetime mortgages and, where appropriate, compare suitable later-life lending options available through our service.
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About the author: Simon Oliver is an Equity Release Expert at My Later Life.
Source: This article references guidance and product standards published by the Equity Release Council.
Important information: Equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits.
A lifetime mortgage is a loan secured against your home. Interest may be added to the amount borrowed, meaning the balance can increase through compound interest.
N.B. “This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.”
Written by Simon Oliver, Expert at My Later Life.
The examples in this article are simplified illustrations. They are not quotations, guarantees or personal financial recommendations. Individual plan terms and lender criteria can vary.
