Inherited property with mortgage can be expensive
Have you inherited property? Then you should anticipate heritage administration and several other obligations you have to fill to get the property in your own hands. In case there is a mortgage on the property, it can happen that you inherit not only the property but also debts. Do you know how to proceed?
Insured loan will be repaid by insurance company
If you are about to inherit real property, you should find out if there are any easements or bank liens. You can easily find out in land register. If there is a lien placed on the property, you have to find out to which bank it relates. Next you should get informed about details of the loan, how much is there to be repaid and under what conditions.
Also find out if the loan was covered by loan insurance. This can also be connected to capital effect of invalidity insurance. If there was an insurance or life insurance together with the loan, the rest of the debt will be paid by insurance company. The heir obtains the property cleaned off the debts.
The installments have to be paid continually
In case there was not any insurance placed with the loan the repayment of the mortgage continues. And in case of not paying an installment, bank can sanction you. First there is a danger of paying another penal interest. Also the bank can confiscate the property based on lien and then to sell it in its own benefit.
The heir is therefore obliged to pay installments not to lose the property. If the heir realizes the installments are too high and cannot afford it, he can give up the inherited property. In that case it is given over to the state which has to take care of the debts on the property. It is also possible to sell the property with the mortgage or redeem debt at once.
Banks usually understand the heirs and in case of early repayment they do not apply penal interest. If there exists also another co-debtor in the mortgage, it is him who has to repay even in case he was not an heir of the property.