Do I need a will if I have a mortgage?
Yes – especially if you have a mortgage. Joint property doesn't solve everything. Here's why a mortgage makes a will more important, not less.
Yes, a will is especially important if you have a mortgage. Joint property passes automatically to your co-owner, but the debt doesn't disappear – and the rest of your estate still needs clear direction.
Joint tenancy vs tenants in common
If you own property with someone as joint tenants, the property passes to the surviving owner automatically on your death – the will can't redirect it. If you own as tenants in common, your share forms part of your estate and passes under the will.
Most Australian couples buy as joint tenants – the home passes to the survivor. That's the point of joint tenancy. But the mortgage doesn't disappear; it follows the property.
What the will still needs to do
Handle the rest of the estate
Super, bank accounts, cars, personal belongings, investment shares – most of these don't pass by joint tenancy. They need a will to direct them.
Provide for life insurance proceeds
Life insurance that pays directly to beneficiaries bypasses the will. But many policies pay to the estate, especially workplace default policies. These need a will.
Address the mortgage debt
If your joint-tenant partner inherits the property, they also inherit the obligation to pay the mortgage. A common estate planning technique is life insurance sufficient to clear the mortgage on death, ensuring the survivor can stay in the home.
Appoint guardians for children
If you have children, guardianship nominations aren't handled by joint tenancy. That's a will function.
Mortgage insurance vs life insurance
Mortgage insurance (or mortgage protection) pays out the outstanding debt on death. Life insurance pays a sum assured to a nominated beneficiary. Many couples use a combination.
If you're single with a mortgage
Without a will, your property passes by intestacy – often to parents or siblings, who may not want (or be able) to continue the mortgage payments. The property may need to be sold to settle the estate.
Summary
A mortgage is one of the reasons you need a will, not a reason to skip one. Joint tenancy handles part of the picture; the will handles the rest. Life insurance planning often goes alongside.
Talk to Sam about your situation
If this article raised questions for your own circumstances, Sam Michele offers free 20-minute initial consultations. Learn more about our wills service, or book a consultation.
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Disclaimer: This article is general information only and does not constitute legal advice. Estate planning is deeply personal - every family's circumstances are different. For advice specific to your situation, please contact Rosewood Succession Solicitors.