Home loan points to cover in your will
03/04/2012 
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Death is a delicate topic, one that many people avoid at a cost to those they leave behind.
By not making a will, they are failing to protect what is usually their largest asset, the home and the costs of the ongoing mortgage loan.
Non-bank home loan lender Resi Mortgage Corporation says anyone with a mortgage should consider what would happen in the event of their death, particularly when more than one person is responsible for the loan.
Resi’s head of consumer advocacy, Lisa Montgomery, says a legal will is the starting point for those who want to have a say in the division of their assets on death.
A will not only speeds up settlement of estate matters, but also helps ease the pain for family and friends who could be left to sort out affairs if someone dies intestate.
People need to be mindful of how the property is held – usually by tenants in common or joint tenants – and if there is a mortgage on it.
Joint tenancy is generally the route couples take on their home. Tenants in common is when separate interests buy a property, for example, friends or siblings purchasing an investment residential or commercial unit.
Ms Montgomery says this has an important effect on how a co-owner’s share is passed on when he or she dies.
Under a joint tenancy, the share automatically passes to the other joint tenant if one partner dies, including any debt that remains.
When a tenant in common dies, the share of the property is passed on in accordance with any instructions in the will.
If there is no valid and enforceable will, the Public Trustee administers the estate and the share may not necessarily pass to the intended recipient. Only if the will states who will receive that share of the property (and any debt owing) can you have control.
Ms Montgomery says borrowers should also consider life insurance options to enable a surviving partner to repay the remaining mortgage.
“Life insurance is really important as many people are under the false impression that when they die, the mortgage debt automatically dies too, and that’s simply not the case.”
Ms Montgomery says regardless of whether you jointly own a property or own a property on your own, every borrower should ensure they have copies of their will, home loan and credit card details, as well as any insurance policies in a safe place, and that either a solicitor, family member or close friend knows where they are.
Source: Courier Mail
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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