What is a probate loan and how does it work?

• A probate loan lets an executor or beneficiary access some of the money tied up in an estate before it has been fully administered.
• Unlike a personal loan, the amount you can borrow is based on the estate rather than your income or credit history. The loan, interest and fees are normally paid back to the lender directly from the estate when it’s ready.
• Provira’s Estate Advance for executors and Inheritance Advance for beneficiaries can provide access to up to 50% of the estate’s net value or your expected inheritance within days.

A probate loan lets you borrow against an estate while it’s still being dealt with. The money is paid back from the estate later, once property is sold or other funds are released, rather than through monthly repayments directly from the borrower.

You may also see this called probate lending, a probate advance loan or a probate estate loan. The reason executors use them is because an estate can be worth a lot of money without actually having much cash available.

For example, an estate might be worth £600,000, but if £550,000 of that is tied up in a house that hasn’t been sold yet, there may be very little cash available to pay bills in the meantime.

At the same time, beneficiaries relying on an inheritance may need the money sooner.

At Provira, an Estate Advance helps executors access money for estate costs such as Inheritance Tax and property maintenance. 

An Inheritance Advance gives beneficiaries early access to some of the money they’re due to inherit, usually within days.

Both of these are a type of probate loan, but the right option for you depends on what you’re planning to use the money for.

Speak to the team and apply today.

What is a probate loan?

A probate loan is a loan given based on the value of an estate rather than your own income, home or credit history.

There are two main reasons someone might need one, depending on whether they’re dealing with the estate or waiting to inherit from it.

Estate Advance

An Estate Advance is for executors or administrators. It provides access to up to 50% of the estate’s net value, after its debts have been taken into account. The money can be used for estate costs like Inheritance Tax, legal fees and property repairs.

Inheritance Advance

An Inheritance Advance is for beneficiaries. It can give them access to up to 50% of what they’re due to inherit before the estate is settled. They can then use the money however they want.

In both cases, the money is loaned against the estate rather than the borrower’s salary or personal credit score. This is why they are such a popular option.

How do probate loans work?

A probate loan gives you access to some of the money tied up in an estate before you’d normally be able to receive it.

You’ll first need to provide information about the estate so the lender can work out what it’s worth and how much could safely be loaned.

With Provira, this usually means providing documents like the death certificate, the will (if there is one), and details of the estate’s property, savings, investments and debts.

We then assess the estate and aim to pre-approve applications within 48 hours.

If we can lend, you’ll get a formal offer explaining how much you can borrow, the arrangement fee and the interest rate. If you’re happy to go ahead, the money can normally be released within a few days.

Importantly, you don’t need to make monthly repayments on the loan. Instead, the advance, interest and fees are paid back from the estate once its assets are sold or the money becomes available.

Who can get a probate loan?

You may be able to get a probate loan if you’re dealing with an estate as an executor or administrator, or if you’re a beneficiary waiting for your inheritance.

You don’t necessarily need a perfect credit history either. The borrowing is based on the estate rather than your personal finances, so there are no personal credit checks.

You can read more about whether you can get a probate loan with bad credit.

Provira lends against assets including property, cash and stocks and shares. Importantly, cars, land and artwork aren’t included when we calculate how much you can borrow, so bear this in mind when you make your application.

If you’re a beneficiary, you don’t need the other beneficiaries to take a probate loan out too. You can apply even if the others don’t want an advance.

Can you get a probate loan before probate is granted?

Yes, with Provira, you can get both an Estate Advance and Inheritance Advance before or after the Grant of Probate.

Getting the Grant of Probate is only one stage of dealing with an estate.

Even after the Grant has been issued, property may still need to be sold, debts paid and accounts settled before beneficiaries receive their inheritance. This means the whole process can take over a year.

A probate loan can give you access to some of the money during that wait, which can relieve a lot of financial pressure.

How much can you borrow with a probate loan?

With Provira, you can access up to 50% of the net value of an estate, or up to 50% of your expected inheritance if you’re a beneficiary.

The exact amount depends on what the estate contains and how it’s valued.

For example, imagine you’re due to inherit £300,000 from an estate that’s still being dealt with. You may be able to access up to £150,000 before the estate is settled, subject to terms.

The advance, interest and fees would then be paid back from your share of the estate when the money becomes available, rather than needing you to pay anything back monthly.

How much does a probate loan cost?

The cost of a probate loan depends on how much you borrow, who your lender is and how long it takes for the estate to repay it.

With Provira, there’s an arrangement fee of between 1% and 2% of the amount borrowed. Interest is then charged at 1.5% to 2% per month.

One of the most important things to know about Provira is that we only charge simple rather than compound interest. This means the amount of interest you are charged doesn’t increase every month, so you always know where you stand.

There are also no early repayment fees, so if the estate settles sooner than expected, you won’t be charged for paying back the advance early.

The important thing to remember is that if you’re an executor, these costs come out of the estate rather than your own pocket. 

If you’re a beneficiary taking an advance, that means you’ll receive less of your inheritance later because you’ve already accessed some of it early.

In both cases, you won’t have to pay anything back monthly.

How is a probate loan repaid?

A probate loan is normally repaid from the estate when the money becomes available, rather than through monthly payments from your own income.

This could happen when a property is sold, investments are released or other estate funds become available.

If the estate turns out to be worth less than expected, you won’t be asked to cover the shortfall yourself, provided there has been no breach of the loan agreement.

What can a probate loan be used for?

An Estate Advance can be used to pay costs connected with dealing with the estate. An Inheritance Advance works differently because beneficiaries can use the money however they want.

For executors, that might mean paying Inheritance Tax, legal fees, funeral costs or bills connected with maintaining an empty property.

Inheritance Tax is a popular reason that executors take out an estate advance because the bill may arrive before the estate has enough cash available to pay it. It’s normally due six months after the date of death, and some of the tax usually needs to be paid before the Grant of Probate is issued.

That can create a cash-flow problem because the estate’s biggest asset is often the house, which may not be ready to sell when the tax needs to be paid.

For example, imagine an estate worth £900,000. It includes an £800,000 house but only £100,000 in the bank. If there’s a £150,000 Inheritance Tax bill, the executor could be £50,000 short despite dealing with an estate worth almost £1 million.

If you’re an executor who needs to borrow money to pay Inheritance Tax, an Estate Advance could provide the money you need to cover the bill so that probate can move forward.

Beneficiaries use Inheritance Advances for different reasons. Some use the money for a house deposit or school fees, while others use it to pay off debt. Unlike an Estate Advance, which is designed only for estate costs, Inheritance Advances can be used for whatever the beneficiary wants.

Is a probate loan a good idea?

A probate loan can be a good idea when an estate has plenty of value but very little cash available to cover urgent costs.

It isn’t the cheapest way to borrow, so before taking one out it’s worth checking whether there are other ways to access the money you need.

Banks and building societies may be able to pay Inheritance Tax directly to HMRC from money held in the deceased person’s accounts for example. You may also be able to pay Inheritance Tax in instalments on certain assets, including property.

In some cases, HMRC may agree to a grant on credit, which allows probate to be issued before all the Inheritance Tax has been paid. This isn’t available in every case, so it definitely shouldn’t be an option that executors rely on.

A bridging loan is another option and may have a lower interest rate, but it’s often secured against your own property, which means your home could be at risk if the loan isn’t repaid.

A Provira loan is assessed against the estate, not your home.

Start by comparing the cost, speed and risks of each option before deciding what works for the estate.

How do you choose between probate loan companies?

Compare more than the headline interest rate when looking at probate lenders. Two loans with similar rates can end up costing different amounts depending on how the interest and fees are calculated.

Check whether interest is simple or compound, whether there are fees for repaying early and whether you’ll need to provide a personal guarantee or secure the borrowing against your own home.

It’s also worth checking whether the lender is authorised by the Financial Conduct Authority (FCA), the UK’s financial regulator.

Most high street banks don’t offer this kind of lending, so you may need to use a specialist provider.

Provira is FCA authorised. We charge simple interest, don’t take a charge over your own home and don’t charge an early repayment fee.

How Provira can help if you want a probate loan

A probate loan won’t be right for every estate. But if the money is there on paper and you can’t access it yet, it can give you another option besides paying estate costs yourself or waiting for property to sell.

With Provira, the borrowing is based on the estate rather than your personal finances. There are no monthly repayments, personal credit checks or charges over your own home, and you can pay it back early without a penalty.

Before you decide anything, we’ll show you how much you could access, what it would cost and how repayment would work before you agree to anything.

If you’re a beneficiary considering an advance, you can also read how an Inheritance Advance helped one customer secure their dream home.

Speak to the team and apply today.