Who Pays for the Mortgage Debts and Medical Bills After Death?

Last updated on April 19, 2024

Featured image for the "Who pays for the mortgage debts and medical bills after death" article. It features a mortgage property.

The death of a loved one is an emotionally challenging event for family members and loved ones. For some family members, this trying period is sometimes further compounded by the fact that their loved one may have passed away with mortgages, debts and/or bills under the deceased’s name that are unpaid.

Who takes over these liabilities? What means are available to pay for them? Fret not, here are the answers to some of your pressing questions and the possible solutions that are available to pay off these liabilities.

What is a mortgage? How is it different from a home loan?

A mortgage is a legal document that you offer to your lender in exchange for a legal claim to your property. A home loan refers to money that is borrowed from a lender (e.g. a bank) to help you buy your property.

In a mortgage, the property itself serves as collateral, while a home loan can be secured or unsecured.

A person who takes up a mortgage is the “mortgagor” or the borrower.

Will My Family and I Inherit the Mortgage from the Deceased Mortgagor?

Generally, you and your family will not inherit the mortgage if the mortgage was signed solely under the deceased’s name, i.e. the deceased did not co-sign the mortgage with you or any other member of the family.

If so, the executor or administrator of the deceased’s estate (depending on whether the deceased had made a will) will sell the property to pay off the mortgage.

However, if you or another family member had co-signed the mortgage with the deceased mortgagor, then that family will ‘inherit’ the mortgage and be liable for it.

The mortgage co-signor will then assume the mortgage responsibilities of the deceased as a sole debtor. What might happen after that will depend on:

  • How the property was paid for (e.g. bank loan or CPF)
  • Whether the property in question is a private property or an HDB flat

1. If the deceased mortgagor paid for the property (whether private property or HDB flat) through bank loans

The surviving mortgagor will have to bring the Grant of Probate to the bank as evidence that he or she has rights to assume responsibility of the mortgage.

Due to the multitude of supporting documents needed in a court application, it is typically advisable to hire a lawyer to handle the paperwork and navigate the process of obtaining the Grant of Probate.

Thereafter, the surviving mortgagor can discuss with the bank of the possible ways of paying off the mortgage, especially when he or she might not have the financial means necessary to do so.

What happens if we can’t repay the mortgage loan?

If the surviving mortgagor is ultimately unable to repay the loan, the lender has the right to foreclose on (i.e. take possession of) the property.

If the property in question is a private property, do also check if a mortgage insurance has been taken out. Also known as Mortgage Reduced Term Assurance (MRTA), this insurance can pay out a sum of money if one of the mortgagors passes away.

2.  If the deceased mortgagor paid for the HDB flat through CPF

If the mortgagor had used his CPF account savings to pay the monthly bank loan instalments of his or her HDB flat, he/she would have been insured under the Home Protection Scheme (HPS).

Under the HPS, if the mortgagor passes away, the CPF Board will settle the outstanding housing loan up to the insured sum, with HDB or the bank which provided the housing loan, directly.

The HPS is compulsory for all individuals who use their savings from their CPF account to pay for their HDB flat.

The HPS does not cover private residential properties, such as executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats.

You can apply to be covered under HPS at HDB Hub or any HDB branch office when you are applying to use your CPF to pay the monthly housing loan instalments. More information on the HPS can be found here.

What Happens to the Deceased’s Mortgage Debts?

Mortgage debts may arise when the mortgagor passes away and misses out on monthly loan repayments.

The first option is to assess if any of your family members can contribute to the management of the debt. If so, you can put their name on the deed (a legal document regarding the ownership of property) and make them a co-mortgagor.

You can also find out about the legal procedures on how debts can be paid off after the debtor’s death here.

What Happens to the Deceased’s Hospital Bills?

If the deceased has left behind medical/hospitalisation bills, you can settle them through his or your Medisave account and/or MediShield Life (a compulsory basic health insurance plan for all Singapore Citizens and Permanent Residents).

Insurance claims can also be submitted under the Dependants’ Protection Scheme (DPS), which is a term insurance that provides insured members and their families with a maximum sum assured of S$70,000 until 59 years of age, and S$55,000 for the next 5 years.

You can get a further boost in funds to pay for the deceased’s medical bills from the disbursement of the deceased’s CPF funds and/or bank account monies.

The events after the death of a loved one can be often saddled with many challenges, not only emotionally but also financially. It is therefore essential to err on the side of caution and make adequate preparations in case of an unfortunate event.

Do note that you will also need to settle the deceased’s estate by applying for a Grant of Probate or a Grant of Letters of Administration. You can consider contacting a probate lawyer for assistance on these matters.

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