- Whether the mortgage becomes due on a death depends mostly on the type of mortgage and its terms, and a reverse mortgage generally comes due when the last borrower dies.
- If you are in default, you can stop the lender from enforcing the acceleration clause by paying the arrears, not money that is only due later, and the lender's necessary expenses, despite any agreement to the contrary, but once a power of sale has closed this right no longer applies and you are limited to a claim for damages against the lender.
- Talk to your lender early about relief options and speak with a lawyer about title and the estate.
Losing a co-borrower is hard enough without worrying about the home. If you are the surviving owner, you probably want to know whether the lender can demand the full balance, who owes the money, and how to stay in the home.
The answers depend on your mortgage contract, how title to the home is held, and the estate. This article explains the general picture and the points where a lawyer's review matters.
Does the mortgage become due when a co-borrower dies?
For most ordinary mortgages, the terms of your mortgage contract and how the home is owned decide what happens next. Read the mortgage documents and speak with the lender and a lawyer before assuming anything.
A reverse mortgage is different. It is usually for homeowners aged 55 or older, and the loan comes due when the borrower sells, moves out, the last borrower dies, or the borrower defaults. After the last borrower dies, the estate has a limited time to repay.
If you also have a second mortgage, you must keep paying the first mortgage too.
Who is responsible for the debt?
Who owes what depends on what each person signed and on the estate. A lender's claim on a mortgage covenant to repay, such as a claim for a shortfall after a power of sale, must be started within the later of 10 years after the cause of action arose and 10 years after the liable person's interest in the land was conveyed or transferred, and this covers guarantees too.
Because the home is the security for the loan, keeping the payments current is usually the safest way to protect it while you sort out the estate. A lawyer can explain how the death affects title and the estate.
Keeping the home: talk to your lender
Contact the lender early, explain the situation, and ask what it needs from you. If your household income has dropped, ask about relief. Options include:
- Federally regulated lenders are expected to give tailored relief to borrowers at risk of default on their principal residence, which can include extended amortization, and your express consent is required.
- That expectation does not extend to provincially regulated and private lenders.
- Other options a lender may offer include blend-and-extend, capitalizing missed payments, and interest-only payments for a limited time.
- A payment deferral usually lasts up to 4 months, interest keeps accruing, and it is an agreement and not a right.
If payments fall behind
A borrower in default can stop the lender from enforcing the acceleration clause by paying the arrears and the lender's necessary expenses. Once the power of sale has closed, the borrower can no longer stop enforcement by paying the arrears and expenses, and is limited to a claim for damages against the lender. You can require a written statement of arrears, which the lender must provide within 15 days.
Where a mortgage has a power of sale, the lender cannot give notice until the default has continued for at least 15 days and cannot sell until at least 35 days after the notice. The notice goes to every person having an interest in the property. A spouse who is not an owner but has a right of possession in the matrimonial home is entitled to the same notice of the lender's claim and its enforcement as the owner-spouse.
What to do next
- Read the mortgage documents and note the type of mortgage.
- Keep making payments while you sort things out.
- Tell the lender about the death and ask about relief.
- Find out how title to the home is held.
- Speak with a lawyer about the estate and your options.
Frequently asked questions
Can the lender demand the full balance when a co-borrower dies?
It depends on the mortgage terms and the type of mortgage, so have a lawyer review your documents. A reverse mortgage generally comes due when the last borrower dies.
Am I responsible for the whole mortgage?
That depends on what you signed and on how the estate is handled. A lawyer can read your mortgage and explain who the lender can look to.
Can I get payment relief after a death?
You can ask. Federally regulated lenders are expected to give tailored relief to borrowers at risk of default on their principal residence, but private and provincially regulated lenders are not covered by that expectation.
What if I fall behind while the estate is settled?
You can generally stop acceleration by paying the arrears and the lender's necessary expenses. Power of sale also has notice periods of at least 15 days before notice and at least 35 days before sale.
Sources
- Ontario.ca – Power of sale assignments (policy) — ontario.ca
- Court of Appeal for Ontario – 2544176 Ontario Inc. v. 2394762 Ontario Inc., 2022 ONCA 529 — ontariocourts.ca
- CanLII – Family Law Act, R.S.O. 1990, c. F.3 — canlii.org
- Financial Consumer Agency of Canada – Borrowing against home equity — canada.ca
- Financial Consumer Agency of Canada – Reverse mortgages — canada.ca
- Financial Consumer Agency of Canada – Mortgage payment deferrals — canada.ca
- Financial Consumer Agency of Canada – Paying your mortgage when experiencing financial difficulties — canada.ca
- Financial Consumer Agency of Canada – Mortgage relief options — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a real estate question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.