Oliver Baumeister von Bretten, Broker | Sotheby’s International Realty Canada, Brokerage

How to Deal With Mortgage After Death

Beautiful home with mortage.

Death is an unfortunate but an eventual part of life. Dealing with the aftermath of death can be very difficult. Have you ever wondered what happens when the person under debt dies or, in particular, their mortgage? Let’s have a close look at how the mortgage is dealt with in such cases.


Beautiful country home with light coming through nearby trees.


Probate Process

The legal procedures revolving around the deceased’s will are collectively called the Probate Process. There are executors who work on behalf of the deceased’s estate. Their task is to repay whatever debt was held in the deceased’s name. Furthermore, this also includes the division of property(ies) amongst the beneficiaries named in the will.


The Will of the Deceased

In most cases, the will is saved in the deceased person’s personal safety storage at the bank. Also, it could be in the credit union. In such events, the executor will have the right to search for the will. However, you, as an executor, will need to show the death certificate to the banker. Once analyzed, the banker will supervise and allow you to continue the process.

In case you are unable to find the will at the aforementioned places, you can check with your province’s Vital Statistics Agency. This agency keeps records of the whereabouts of the will as registered by the deceased. Under the Canadian Estate Administration Act, once you find the will, you will need to provide copies to the heir(s) or beneficiaries.


How Legal After-Process Works

Following are the processes that will occur legally once the will is filed for probate:

  • The law permits the deceased’s immediate family to request adjustments to the will in court. Thereafter, the proceedings will run under Canada’s Will Variation Act.
  • Children or spouses of the deceased have the right to dispute the terms and conditions of the will. This happens because (i) of their portion of inheritance being unsatisfactory or, (ii) if they are not named at all.
  • If the deceased was married after creating the will, the document might be considered invalid.
  • All the benefits given to a spouse will nullify in case there is a divorce.


Debts Subjected to Probate Process

The probate process has 2 conclusions. First, the exclusion of small-scale debts. For example, credit card debts are usually declared as losses. This is because the legal proceedings would be far more expensive than the compensation. Second, mortgage that includes assets will definitely want a payout. This is particularly in the case of homeowners.



In Case of Death of Sole Owner

Regardless of the terms stated in the will, home debts will go through probate. The estate of the deceased is accountable for the payout of the debts.

In Case of Death of a Spouse or Co-Owner

If the deceased applied for a joint mortgage, the assets would become the sole responsibility of the surviving partner. Fortunately, Ontario does not subject joint mortgages to the probate process. The surviving partner can either resume the mortgage or sell the assets to pay it down. In the case of renewing the mortgage, they will need their own creditworthiness and financial help. Also, it can be quite risky because in case they don’t qualify, the moneylender may ask for the complete payoff immediately.


Who is an Estate Trustee?

The person left in charge of the deceased person’s property(ies) is called an estate trustee. They can also act as an executor in case the will does not mention any. If/when an estate owner takes the sole ownership of the deceased properties, they will have the following responsibilities:

  • Paying debts or insurance policies
  • Maintaining the appraisal of the property for resale.

It’s important to know that an estate trustee can’t sell the property until all the debts related to it have been paid.


Difference Between Mortgage Insurance and Life Insurance

Mortgage insurance is important to clear any debt after you pass away. This is particularly mandatory because debt can be a huge burden on your family members. However, mortgage insurance has its own risks. The paid down mortgage rate might be lower. Hence, insurance might be a futile attempt. However, life insurance is beneficial in multiple ways. The beneficiaries can use the life insurance to pay off the debts and even save some for other causes.


Difference Between Positive and Negative Equity

Sometimes, mortgage value can exceed the value of the property. In that case, covering up the debt will not be the easiest option. So, the executor and the moneylender can set the property on a sale. This might be a loss for the seller, but on a brighter side, they will not be dealing with the overvalued mortgage.


Reverse Mortgage in Case of Death

Reverse Mortgage is for homeowners above the age of 55 with a mortgage secured against the proprietorship. It allows them to access 55% of the property’s market value. Furthermore, they don’t need to sell the property or make any payments until the full balance is due.



It is so essential to know the investments you make in life. After all, in the end, you would want to leave your beloveds with something other than debts.

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