This advertorial has been written by our third-party product provider NobleOak Life Limited

Owning a house is one of the most important purchases you can make but it can also be the biggest investment you might face in your lifetime. Most Australians spend a good part of their life repaying their mortgage and unfortunately, some pass away before paying it off.

There are some key things to consider and decisions to make to ensure your family would be in a good financial position if you were to pass away before paying off your mortgage.

Firstly, what happens with your property immediately after your death depends on whether you have a valid will naming one or more beneficiaries of your estate. It is always a good idea to make a will and remember that if you remarry or enter a new relationship, previous wills can become void.

Wills and inheritance can be complex and you should consult a lawyer (and potentially also an accountant or financial adviser) for advice.

What happens if there is no beneficiary?

If you have not organised a valid will, your property is generally divided between your relatives. Inheritance laws vary from state to state, so the property might not go to the person of your choice.

Things can get complicated if you have a blended family.

In some states, a de facto spouse and a legal spouse have the same rights. But in other parts of the country, a legal spouse is allocated a more substantial share than a de facto spouse would be. In some states, people who are dependent on you might also bring claims even if they’re not in your will.

To reduce complications, you could think about making a valid will with identified beneficiaries. But you have to be over 18 (with a few very limited exceptions) and have sufficient mental capacity to create a will. It is typically the case that you will also need two witnesses to sign it to make it valid.

What happens if there is a beneficiary?

If you have named a beneficiary for the property in your will, they will inherit it when you die but they will also inherit any debts tied to it. So, if you have not paid off the mortgage, the beneficiary would have to take care of it.

In Australia, mortgage size can be substantial, and can put a heavy financial burden on the beneficiary. If you are the sole borrower under the mortgage, the bank might even ask the beneficiary to pay the mortgage in full. Here is what typically happens in that case.

The best-case scenario is that there are enough assets in the estate or left to the beneficiary to allow the executor or beneficiary to pay off the debt. In that case, the beneficiary could inherit the property in full after the bank has been repaid the full amount.

However, if there are not enough assets left to the beneficiary to pay the mortgage, the beneficiary might have to sell the property or disclaim the inheritance (unless they decide to use their other assets to meet the mortgage). Depending on how much of the mortgage remains unpaid, there is the possibility that they fall short of obtaining enough sales proceeds to cover the mortgage – if this is the case, the bank can sue them for the balance. In that case, they might have to sell other assets to pay the bank.

Perhaps more commonly, but not always, the bank might let the beneficiary take ownership of the mortgage if they meet the lending criteria. They will then continue to pay the monthly amount.

What happens if you hold the debt jointly with a partner?

Most people in Australia co-sign the mortgage contract with their spouse or civil partner. If you had signed your loan with your spouse or partner, they would assume the mortgage. That means they will be solely responsible for the monthly payments.

Your spouse or partner will not have to sell the house when you die if they are able to meet the mortgage repayments. They will also become the sole owner of the property, subject to the mortgage.

What about if there is a guarantor on the mortgage?

Some people need a guarantor, usually a family member, to qualify for a mortgage. Having a guarantor can also allow them to borrow more without incurring lenders mortgage insurance.

On the flip side, one of the guarantor’s properties might serve as the loan’s security. So, in such a case, if you fail to pay the mortgage, the guarantor will have to do so or risk having to sell the property which they provided as security. If you die, unless there is someone else meeting the mortgage repayments, the bank will ask the guarantor of your loan to pay the mortgage. The bank may force the sale of your property if the guarantor does not have the money.

You should think about a contract with your guarantor that outlines how they will pay off the mortgage if you die.

What happens if you have secured the mortgage against a family member’s asset?

If you’ve secured the mortgage against your family member’s asset, they’re likely to have to meet the debt (unless of course you have other arrangements in place for the mortgage to be paid off). If the bank looks to their assets for repayment, they might instead be able to cover the debt with their own money in a best-case scenario. But they may instead have to sell the assets marked as security for the mortgage.

How can life insurance help?

If you hold life insurance, this can help your nominated policy beneficiary or beneficiaries to pay off the mortgage if you were to pass away as they would receive a lump-sum payout. They can use the money to cover your debts, including the mortgage if they decide to do so.

The good news is that you can choose to cover enough to pay for the mortgage (subject always to underwriting guidelines). That means your beneficiary would be able to inherit the property and be left with enough to meet repayments (assuming they are the beneficiary for your property under your will as well as the beneficiary of your life cover).

To get a quote from NobleOak, speak to their friendly team on 1300 108 490 or go to

General advice in this material is from NobleOak Life Ltd AFSL 247302

This material is a promotion for NobleOak. Qudos Bank does not provide any financial advice in connection with life insurance – it is not licensed to do so. General financial advice in this material is provided by NobleOak and does not take into consideration your individual circumstances, objectives, financial situation, or needs. You should carefully consider the PDS and the target market determination to decide if NobleOak life insurance is right for you.

FlexiCover is issued by NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 (‘NobleOak’). Qudos Mutual Limited trading as Qudos Bank ABN 53 087 650 55 AFSL/Australian Credit Licence 238 305 (‘Qudos Bank’) is not responsible for the FlexiCover product. Qudos Bank promotes the FlexiCover product under a marketing arrangement with NobleOak but does not provide any financial advice regarding the product. NobleOak Services Limited (wholly-owned by NobleOak) pays Qudos Bank an ongoing commission of 16.5% of premium when products are acquired as a result of the marketing arrangement. This commission is at no additional cost to customers. Further information can be found in the NobleOak Financial Services Guide (FSG) available at

^NobleOak awards information found at

*Life cover pricing information - premiums are payable annually or monthly. Life cover from 90c per day is an example (using premium rates current as at 18 June 2022), based on a 40 year old male non-smoker (sum insured $500,000) who pays monthly, who is accepted on standard underwriting terms, resides in NSW and works in a white-collar occupation. Life cover premium rates tend to be higher for males. Premiums increase each year with age, and may change in future. Your actual premium for life cover will be based on a range of factors including your age, health, smoker status, occupation and pastimes. Cover is subject to underwriting.

~To be eligible for this payment, you must be diagnosed as terminally ill with an illness that is likely to result in your death within the next 24 months. The diagnosis must be made by two medical practitioners, one of whom is a specialist in the field. NobleOak will pay 100% of your life cover amount following diagnosis, instead of upon death.

Cover is available to Australian residents and is subject to acceptance of the application and the terms and conditions set out in the FlexiCover Product Disclosure Statement (PDS). This information is of a general nature only and does not take into consideration your individual circumstances, objectives, financial situation or needs. Before you purchase an Insurance product, you should carefully consider the PDS to decide if it is right for you. The PDS is available by calling NobleOak on 1300 108 490 or from

The Target Market Determination for NobleOak’s FlexiCover insurance is available at

Clients should not cancel any existing Life Insurance policy until they have been informed in writing that their replacement cover is in place. NobleOak cannot provide you with personal advice, but our staff may provide general information about NobleOak Life Insurance. By supplying your contact details, you are consenting to be contacted by NobleOak, in accordance with NobleOak’s Privacy Policy.

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