What happens to the mortgage when the owner dies

The payment of the mortgage has become one of the main sorrows of much of the global middle class that, pushed by the financial crisis of 2008 and the consequences of successive real estate bubbles, have become a burden for many families. The mortgage loans, given the overvaluation that had been awarded to real estate, have become so high that to meet the quotas, the loans were extended for long periods of time, so much so that sometimes the heir will have to assume the debt as part of their inheritance. In .com we tell you what happens to the mortgage when the owner dies.

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In places like Spain, Italy or Greece, it has not been uncommon for houses to be priced above the real market value during the first years of the new millennium and with a tremendous real estate boom . In this way, in order for the client to be able to meet these loans, the banks adopted the option of granting mortgages to be paid in 30, 40 and up to 50 years . The measure was not new. In the US, mortgages were already being repaid in 100 years.

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For banks the measure was round. If everything went well, they would charge many more interests for much longer. If things went bad, they kept the house. The question is what happened to beneficiaries and how they could manage that inheritance, in case of death of the owner of the mortgage. Well, as in everything, there are several possible scenarios.

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In the first place, it must be clear that the heir inherits both assets and debts . So, in principle, the unfinished mortgage would become a debt of the heir. However, the law provides for the fact that you can renounce the inheritance or even accept it for the benefit of inventory.

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If you reject the inheritance, of course, you reject any debt including the mortgage. If you accept the figure of acceptance for the benefit of inventory, it means that you accept the goods but not the debts . In such a case, those assets are appraised, the creditors are summoned, they are paid, and if something were left over, it would pass to the heir.

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Finally, the most used figure is the one taken a priori. That is, the one adopted by the mortgage holder in anticipation of his death. It is an insurance and, although it is not mandatory to hire it, the banks themselves "force" in many cases to be contracted as a condition for granting the loan. If this were the case, when the owner dies, the insurance takes over part or all that remains to be paid from that mortgage and the heir may assume the property free of charge.

The heir may apply to the Ministry of Justice for a Certificate of Insurance Contracts for death coverage and it will detail all the insurance that the deceased had.