Property with mortgage when you passed away.

Hi, what will happen to the property with mortgage when you passed away? How the property will be transferred to them, by will? Will the beneficiary continues the mortgage?

 

I have written a legal tip on this. Basically the mortgage will need to be discharged which will mean the loan has to be paid out or refinanced somehow.
Under NSW law debt comes out of the property it is secured against unless the will says otherwise

 

Thank you Terry. The refinance will be done by the beneficiary? How does the bank will know?

 

Any change in title has to be agreed by the mortgagee.

for the same reason, if you try to sell a property the lender will find out (and prevent it unless they get paid out).

 

and at least one tax tip

Tax Tip 263: Multi-generational Debt Recycling Strategy

 

This might be the one i was thinking of
Legal Tip 74: Loans Death and Inheritance Legal Tip 74: Loans Death and Inheritance

and
Legal Tip 237: Using to Loans as an Estate Planning Strategy for Death Legal Tip 237: Using to Loans as an Estate Planning Strategy for Death

Legal Tip 244: Death, Offset Accounts with Loans fully offset Legal Tip 244: Death Offset Accounts with Loans fully offset

 

To access no charge for duty on death a change a change of legal owner occurs... to the beneficiary in will. OSR require the will to grant that exemption. Bank will be involved to enable it to change that title.....You cant change owner without mortagee consent. They want the loan paid out...or refinanced. eg If the beneficiary cannot afford a loan the lender may refuse and in which case it may limit the property to being sold. The lender will be discharged at settlement.