probate loans
Probate Loans FAQ
Probate loans can provide essential financial support when you’re waiting for an inheritance, but understanding how they work raises many questions.
Whether you’re an executor managing estate expenses or a beneficiary seeking early access to your inheritance, these frequently asked questions address the key concerns and processes involved.
Basics
What is a probate loan?
A probate loan is a short-term financial product that allows you to borrow money against an expected inheritance while waiting for the probate process to complete. Unlike normal loans, these are secured against the value of the inheritance itself rather than your personal assets or income.
The loan is repaid directly from the estate once probate is granted and assets are distributed. This means you can access funds within days or weeks instead of waiting the typical 9-12 months for probate to conclude.
Probate loans are particularly useful for covering immediate expenses like inheritance tax payments, property maintenance costs, or personal financial needs whilst the estate is being administered.
How do probate loans work in the UK?
The process begins with an assessment of the estate and your expected inheritance. You’ll need to provide documentation including the will, death certificate, and estate valuation details.
Once approved, you receive the funds quickly – often within a few days. The maximum loan amount is typically between 25-50% of your expected inheritance, depending on the estate’s complexity and value.
Interest accumulates during the loan term, but there are no monthly payments required. When probate completes and you receive your inheritance, the loan plus accumulated interest is automatically deducted from your inheritance amount.
The entire arrangement is handled through solicitors to ensure legal compliance and protect all parties involved.
What’s the difference between a probate loan and an inheritance advance?
The terms are often used interchangeably, but there can be subtle differences in structure and target audience.
An inheritance advance is typically aimed at beneficiaries who want early access to their inheritance. The focus is on providing liquidity whilst waiting for estate settlement.
A probate loan may have a broader scope, including products for executors who need to cover estate administration costs, or more complex lending arrangements for contested estates.
Both products work on the same basic principle – you borrow against your expected inheritance and repay from the estate proceeds. The key distinction often lies in the marketing approach and specific terms offered by different lenders.
Can I get a loan against an inheritance before probate is granted?
Yes, most probate loan providers will lend before the Grant of Probate is issued, provided they can verify your entitlement to the inheritance.
You’ll need to demonstrate a clear legal right to the inheritance, typically through a copy of the will or evidence of your position under intestacy rules. The lender will also require confirmation from the estate’s solicitor about the probate application status.
Pre-grant lending does carry slightly higher risk for lenders, so interest rates may reflect this. However, this is often when borrowers most need access to funds, particularly for paying inheritance tax within HMRC’s six-month deadline.
The application process may take longer pre-grant as lenders need to conduct more thorough due diligence on the estate and your legal position.
Are probate loans the same as estate loans?
Estate loans and probate loans are essentially the same basic product, though the terminology can vary between providers. Both refer to lending secured against inheritance or estate assets.
Some providers may use “estate loans” when targeting executors who need to cover administration expenses, whilst “probate loans” might be used for beneficiary-focused products.
You may also see terms like “inheritance loans,” “executor loans,” or “testamentary loans” – these all describe variations of the same basic concept.
The important factor is understanding the specific terms and conditions of any product, regardless of what it’s called. Always check whether you’re looking at lending for beneficiaries, executors, or both.
Eligibility & Requirements
Who can apply for a probate loan?
Several categories of people can apply for probate loans:
Beneficiaries named in a will or entitled to inherit under intestacy rules can borrow against their expected inheritance.
Executors appointed in a will can access funds to cover estate administration costs, including inheritance tax payments and professional fees.
Administrators appointed by the court when someone dies without a will have similar borrowing rights to executors.
Personal representatives is a broader term covering both executors and administrators.
You must be over 18 and have a legitimate legal interest in the estate. Joint applications are possible when multiple beneficiaries want to borrow collectively.
Most lenders require the inheritance to be relatively straightforward with minimal dispute risk.
Do I need good credit to get a probate loan?
No, probate loans don’t require good credit or any credit check at all. This is one of their key advantages over traditional lending.
Because the loan is secured against your inheritance rather than your personal financial circumstances, lenders assess the estate’s value and your legal entitlement rather than your creditworthiness.
This makes probate loans accessible to people who might struggle to get conventional loans due to poor credit history, irregular income, or unemployment.
However, lenders will verify your identity and legal right to the inheritance. They will also conduct basic fraud prevention checks, but these don’t affect your eligibility based on credit scoring.
This no-credit-check approach is possible because the lender’s security comes from the estate assets rather than your personal guarantee.
What documents do I need to apply?
The documentation requirements typically include:
Death certificate – Official proof of death from the registrar
Will – Original or certified copy showing your entitlement
Probate application – Evidence that probate proceedings have commenced
Estate valuation – Professional assessment of assets and liabilities
Property valuations – For any real estate in the estate
Bank statements – Showing estate account balances where available
Insurance policies – Life insurance and other policy documents
Identification – Passport or driving licence for identity verification
Your solicitor can help gather these documents and may provide a letter confirming your legal position and the estate’s status.
The exact requirements vary between lenders, but having comprehensive documentation speeds up the approval process significantly.
Can I get a loan if the will is being contested?
Some specialist lenders offer “contentious probate loans” specifically for disputed estates, but these are more complex and expensive than standard probate loans.
If you’re challenging a will or defending against a challenge, you may be able to borrow to fund legal costs, provided you can demonstrate reasonable prospects of success.
However, most mainstream probate loan providers avoid contested estates due to the uncertainty around final inheritance amounts and distribution.
The key factors lenders consider are:
- The strength of your legal position
- The likelihood of a successful outcome
- The potential value of your inheritance if successful
- The timeframe for resolving the dispute
Legal costs insurance may be required, and interest rates are typically higher to reflect the additional risk involved.
What happens if I’m not the main beneficiary – can I still apply?
Yes, you can apply for a probate loan even if you’re entitled to a smaller share of the estate, though the loan amount will be limited to a percentage of your specific inheritance.
For example, if you’re inheriting £50,000 from a £500,000 estate, your loan would be calculated against your £50,000 entitlement rather than the total estate value.
Some lenders prefer larger inheritances as they’re more commercially viable, but others specialise in smaller loans for minor beneficiaries.
Joint applications with other beneficiaries can increase the total borrowing amount and may offer better terms than individual applications.
The key requirement is having a clearly defined entitlement that can be verified through the will or intestacy rules.
Related: What Does Being a Beneficiary Mean?
Costs & Financial Terms
How much do probate loans cost?
Probate loans typically cost 2% per month in interest, equivalent to annual rates of approximately 25%. The exact rate depends on factors like estate complexity, loan amount, and lender assessment of risk.
In addition to interest, expect to pay:
- Arrangement fees: Usually 1-2% of the loan amount
- Legal fees: For the lender’s solicitor to review documentation
- Valuation costs: Professional property and asset valuations
- Administrative charges: Processing and management fees
For example, on a £50,000 loan at 2% monthly interest over 10 months, you’d pay £10,000 in interest plus fees, making the total repayment around £62,000-£65,000.
These costs may seem high compared to conventional loans, but they reflect the specialised nature of the product and the risks involved in estate lending.
What interest rates do probate loans have?
Interest rates on probate loans are generally around 2% per month. The monthly rate structure reflects the short-term nature of these loans.
Factors affecting your rate include:
- Estate value and complexity – Larger, simpler estates often get better rates
- Your inheritance percentage – Higher entitlements may qualify for lower rates
- Property types involved – Commercial property may attract higher rates than residential
- Timeframe expectations – Longer expected probate periods may increase rates
- Lender’s assessment – Each provider has different risk criteria
Some lenders offer fixed rates throughout the loan term, whilst others may have variable rates that can increase if probate takes longer than expected.
Always ask for the total amount repayable under different scenarios to understand the full cost implications.
Are there any upfront fees for probate loans?
Most probate loan providers charge upfront fees in addition to ongoing interest. Common fees include:
Arrangement fee – Usually 1-2% of the loan amount, covering administrative costs and profit margin
Legal fees – The lender’s solicitor costs for reviewing estate documentation and preparing loan agreements
Valuation fees – Professional valuations of property and other significant assets in the estate
Application fee – Some lenders charge a processing fee, though many have moved away from this
Due diligence costs – Investigating the estate’s assets and liabilities
Total upfront fees typically range from 2-4% of the loan amount. On a £50,000 loan, expect to pay £1,000-£2,000 in fees before receiving the net loan proceeds.
Some lenders add these fees to the loan balance rather than requiring upfront payment, though this increases the total interest cost.
How is interest calculated on probate loans?
Probate loans and inheritance loans are set up on an interest-only basis, and don’t require monthly payments.
Interest on probate loans is calculated monthly from the date funds are advanced but this is then added to the original amount borrowed.
Most lenders use compound interest, meaning interest is charged on both the original loan amount and any accrued interest.
For example, on a £50,000 loan at 2% monthly compound interest:
- Month 1: £50,000 × 2% = £1,000 interest (balance: £51,000)
- Month 2: £51,000 × 2% = £1,020 interest (balance: £52,020)
- Month 3: £52,020 × 2% = £1,040 interest (balance: £53,060)
Some lenders offer simple interest arrangements where charges are calculated only on the original loan amount, which is more favourable to borrowers.
Interest starts accruing from the day funds are released, not from the application date. Make sure you understand whether your lender uses simple or compound calculation methods.
What happens if probate takes longer than expected?
If probate extends beyond the expected timeframe, interest continues to accrue on your loan balance. This can significantly increase the total amount repayable, particularly with compound interest arrangements.
Some lenders offer fixed rates for extended periods or rate caps after a certain timeframe.
Probate is a long process and relatively straightforward cases will take 9-12 months.
It can easily take 12-18 months in complex cases, and contested estates may take several years to resolve.
Loan Amounts & Limits
How much can I borrow against my inheritance?
Most probate loan providers will lend between 25% and 50% of your expected inheritance value, though some specialist lenders may go up to 70% in exceptional circumstances.
For example, if you expect to inherit £200,000 from a straightforward estate, you might access £50,000-£100,000 through a probate loan.
Is there a minimum loan amount?
Most probate loan providers have minimum lending amounts, typically ranging from £10,000 to £25,000. This reflects the administrative costs and legal work involved in processing these specialised loans.
Smaller inheritances may not be commercially viable for mainstream probate lenders due to the fixed costs involved in legal review, documentation, and estate assessment.
What’s the maximum I can borrow with a probate loan?
Maximum loan amounts vary significantly between providers, with most mainstream lenders offering up to £1-2 million for high-value estates. Specialist private lenders may consider larger amounts for exceptional circumstances.
The practical maximum depends on:
Your inheritance value – Even at 50% lending ratios, you need substantial inheritance for large loans
Lender capabilities – Not all providers have the capital or appetite for very large loans
Risk assessment – Complex high-value estates may face lower lending percentages
Security requirements – Very large loans may require additional security or guarantees
How is my loan amount calculated?
Probate loan amounts are calculated through a detailed assessment process examining several key factors:
Estate valuation – Professional valuations of all significant assets, including property, investments, business interests, and personal effects
Liability assessment – Outstanding debts, funeral costs, administration expenses, and tax liabilities are deducted from gross estate value
Your inheritance share – The percentage or specific amount you’re entitled to under the will or intestacy rules
Liquidity analysis – How easily estate assets can be converted to cash affects lending appetite
Risk factors – Potential disputes, complex assets, or uncertain valuations reduce available lending
Lender criteria – Each provider has different risk tolerances and lending multiples
The calculation typically follows this formula: (Your inheritance entitlement – estimated costs) × lender percentage = maximum loan amount
For example: £300,000 inheritance – £50,000 costs = £250,000 net entitlement × 50% = £125,000 maximum loan.
Repayment & Security
Do I have to make monthly payments?
No, probate loans don’t require monthly payments. This is one of their key advantages and distinguishing features from standard lending products.
Instead, the loan operates on a “rolled-up” interest basis where:
- Interest accumulates monthly and is added to the loan balance
- No payments are due during the loan term
- The entire amount (original loan plus accumulated interest) is repaid in one lump sum when the estate settles
This structure is designed to avoid placing additional financial pressure on borrowers during what is often a difficult period following a bereavement.
The repayment comes directly from your inheritance, so you don’t need to find money from other sources to service the loan.
However, if you have access to other funds and want to reduce interest accumulation, some lenders allow voluntary partial repayments during the loan term.
What happens if the estate is worth less than the loan?
This scenario, known as “estate shortfall,” is a key risk that reputable probate loan providers address in their terms and conditions.
Most established lenders offer “non-recourse” lending, meaning if the estate cannot fully repay the loan, you’re not personally liable for the shortfall. The lender absorbs the loss rather than pursuing you for the difference.
However, this protection typically comes with conditions:
- The shortfall must not result from fraud or misrepresentation
- Asset valuations must have been reasonable at the time of lending
- You must have acted in good faith throughout the process
Some lenders may require personal guarantees for larger loans or higher-risk estates, making you liable for shortfalls. Always clarify this before signing.
Estate insurance may be available to protect against valuation shortfalls, though this adds to the overall cost.
This is why accurate estate valuations and conservative lending multiples are so important in probate lending.
Can I repay my probate loan early?
Most probate loan providers allow early repayment, and many don’t charge penalties for this. Early repayment can save significant interest costs, particularly on longer-term loans with compound interest.
Situations where early repayment might be possible:
- Partial estate distributions – Some assets are released before full probate completion
- Property sales – Estate property is sold during administration
- Insurance proceeds – Life insurance policies pay out early
- Family assistance – Other family members provide funds
- Alternative financing – You secure cheaper funding from elsewhere
Benefits of early repayment:
- Reduces total interest costs significantly
- Eliminates ongoing monthly interest accumulation
- Provides peace of mind and financial closure
Always check your loan agreement for early repayment terms. Some lenders require minimum interest periods or notice requirements, though penalty-free early repayment is becoming standard in the competitive probate lending market.
Am I personally liable for the loan?
In most cases, no – you’re not personally liable for a properly structured probate loan. The loan is secured against your inheritance, not your personal assets or income.
This means:
- The estate is liable – Repayment comes from inheritance proceeds
- No personal guarantee – Your home, savings, or other assets aren’t at risk
- Limited recourse – Lenders typically can’t pursue you personally for shortfalls
- Estate-only security – The loan is secured solely against inherited assets
However, personal liability can arise if:
- You provide false information about the estate or your entitlement
- You act fraudulently or breach the loan terms
- You’re an executor who mismanages estate assets
- The loan agreement specifically includes personal guarantees
Always read loan terms carefully and ensure you understand the liability structure. Reputable probate lenders emphasise the non-recourse nature of their loans, but terms can vary between providers.
Specific Use Cases
Can I use a probate loan to pay inheritance tax?
Yes, probate loans are commonly used to pay inheritance tax, and some lenders offer specific products designed for this purpose.
Why this matters:
- Inheritance tax must be paid within 6 months of death
- Penalties and interest apply for late payments
- Banks often won’t release estate funds without the Grant of Probate
- This creates a cash flow problem for many estates
IHT loan features:
- Quick approval and funding to meet HMRC deadlines
- Loan amounts calculated against expected inheritance
- Direct payment to HMRC often available
- Interest rates may be competitive due to the specific purpose
Typical process:
- Estate valuation determines IHT liability
- Loan application based on inheritance entitlement
- Funds released to pay HMRC directly
- Loan repaid when probate completes and inheritance is received
This is often the most cost-effective approach compared to HMRC’s instalment options or other funding sources.
Can loans help with property maintenance costs?
Yes, probate loans are often used to cover property maintenance and ongoing costs during estate administration.
Properties in the estate require continued insurance, utilities, maintenance, and security throughout the probate process.
Common property-related expenses:
- Buildings and contents insurance
- Utility bills (gas, electricity, water, council tax)
- Security systems and property management
- Essential repairs and maintenance
- Garden and grounds upkeep
- Empty property insurance if unoccupied
Why these costs matter:
- Executors are legally responsible for preserving estate assets
- Unmaintained property can lose value significantly
- Insurance claims may be rejected if properties aren’t properly maintained
- Some costs continue for 12+ months during probate
Funding considerations:
- Property-related loans may attract better rates due to tangible security
- Costs are legitimate estate expenses and reduce inheritance tax liability
- Proper maintenance protects the estate’s value for all beneficiaries
Many probate lenders view property maintenance as a sensible use of loan proceeds that protects their security.
Can I use a probate loan for living expenses?
Yes, probate loans can be used for personal living expenses, particularly if you were financially dependent on the deceased or facing hardship whilst waiting for your inheritance.
Appropriate circumstances:
- You relied on the deceased for financial support
- You’re unable to work due to bereavement or caring responsibilities
- You need to take time off work to handle estate administration
- Your own financial situation has become difficult following the death
Common living expenses covered:
- Mortgage or rent payments
- Household bills and utilities
- Food and daily necessities
- Childcare or eldercare costs
- Medical expenses
- Transportation costs
Important considerations:
- Living expense loans may attract standard interest rates rather than preferential rates available for estate-specific purposes
- Consider whether the interest costs are justified for non-essential expenses
- Alternative sources like benefits, family support, or employer assistance may be more cost-effective
Responsible borrowing: Only borrow what you genuinely need for essential expenses. The interest costs can be substantial, so consider carefully whether early access to inheritance justifies the expense.
Are probate loans suitable for business expenses?
Probate loans can be suitable for business expenses, particularly when the deceased owned a business that forms part of the estate or when business continuity is important for preserving estate value.
Business-related scenarios:
- Inherited business operations – Funding working capital, wages, or essential costs
- Partnership businesses – Meeting obligations to business partners or buying out shares
- Property businesses – Maintaining rental properties or commercial premises
- Professional practices – Continuing medical, legal, or other professional services
Advantages for business use:
- Quick access to funding without lengthy business loan applications
- No personal guarantees typically required
- Interest may be deductible as a business expense
- Preserves business value for ultimate benefit of the estate
Considerations:
- Business-related lending may require specialist assessment
- Higher loan amounts might be justified for income-generating assets
- Professional advice essential for tax and legal implications
- Exit strategies should be planned in advance
Risk factors:
- Business losses could affect estate value and loan security
- Complex business structures may complicate lending arrangements
- Trading businesses carry inherent commercial risks
Always seek professional advice when using probate loans for business purposes.
Get Expert Guidance on Your Probate Loan Options
Don’t spend hours researching lenders or risk choosing an unsuitable option. Our specialists can help you to find the right solution for your circumstances.
Call or email us today.
