Life changes, part 3: Death of a loved one

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The passing of someone with whom you have built a life and a family together is an incredibly difficult experience. Not only may you struggle to cope with the grief of losing them, but a great deal of practical issues will arise in the event of their death. If you were both working, two incomes will be reduced to one, which will make paying off your home loan more difficult.

For the final blog post in this three part series on life changes, we go through some of the things you’ll need to think about in the event of your spouse’s death, and what options are available to you. It’s not an easy time, but hopefully we can help you minimise the stress of your home finances.

Keeping your existing property

The house you currently live in is an environment filled with many happy memories of the times you and spouse spent together. Understandably, the thought of leaving your family home can be devastating.

Perhaps you are comfortable enough on your own income and can continue to meet mortgage repayments, but this certainly won’t be the case for everybody.

In the event that your partner put arrangements in place before their death, you may be lucky enough to not have to worry about selling your home. Your late partner’s death benefit (their superannuation balance plus their life insurance payout) can be used to reduce or even pay off the mortgage completely, depending on the balance you have remaining.

Alternatively, you can consider restructuring your existing home loan to take advantage of a better arrangement that offers you more flexibility in your current situation of upheaval.

Before you start worrying about needing to sell your home, make sure you are aware of all the options out there.

Dealing with a mortgage can create additional stress in the aftermath of a loved one's death. Dealing with a mortgage can create additional stress in the aftermath of a loved one’s death.

Selling your home

In some cases, particularly if your partner passes away young or during middle-age, you will still have excessive mortgage debt remaining. In the case that you can no longer afford to meet your repayments, you may consider selling your home and downsizing to a property that fits your new budget.

Downsizing is a viable option if you’ve got kids who have moved out of home and a lot of interior and outdoor space to maintain on your existing property. Bear in mind, though, that downsizing is not always cheaper than remaining in your current house. When you factor in stamp duty and agents’ fees, you could be set back $55,000 for an average-priced property, according to the 2017 McGrath report.

The decision to remain in your property or sell it is a very personal one, but you’ll be dictated in large part by your financial situation. When you’ve got funeral arrangements to take care of, family members to attend to and grief to deal with, sorting out your mortgage is daunting. There is where a mortgage broker can help.

How can a mortgage broker help you?

Whether you need to refinance your existing home loan or choose to sell your house and downsize, an experienced mortgage broker will be with you every step of the way to ensure that the process is as hassle-free as possible. Paperwork is the last thing you want to deal with after losing a spouse. We do all of that for you, so that you can focus on the stuff that really matters.

You can contact a Smartline Mortgage Adviser on 13 14 97 for mortgage advice. Or complete our call request form and we’ll call you!

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