Using a Bridging Loan to Settle Inheritance Tax

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Pay your inheritance tax bill with a specialist bridging loan product.

Bridging loans are a unique, short-term financing product that can be used to pay off all manner of urgent debts, including inheritance tax bills, HMRC tax demands, and several other time-critical financial obligations that need to be settled quickly. They are typically used to bridge a short-term gap until a more permanent solution can be arranged and put in place, such as a commercial mortgage or some other secured loan product, when it takes a considerable length of time before the funds are released and made available to the borrower.

If someone has left you a valuable amount of real estate as part of a will settlement and you need to settle the inheritance tax before you can sell the acquired property, then a short-term borrowing product such as a bridging loan secured against those assets will enable you to pay the outstanding amount off quickly and effortlessly.

Would I be better off with a second mortgage?

If the funds are only required for a short period of time, then a bridging loan is often the most cost-effective solution. Unlike mortgages or second-charge loan products, bridging finance can be arranged much more swiftly, and the cost of borrowing is highly competitive in comparison. This is particularly true when you consider that a bridging loan is usually repaid in a matter of months, as opposed to the 10 to 25 years that a mortgage would last.

The interest itself is also charged on a monthly basis and can be added to the total cost at the end of the loan, along with many of the other charges, such as admin costs and broker fees. Additionally, there are no heavy exit charges to pay if you choose to settle early, depending on the individual loan product you apply for.

How much can I borrow?

Bridging loans can normally be sourced up to 70% LTV, and in some cases, up to 100% loan-to-value, if you are able to provide additional security in the form of a second or third property that you own. The actual amount you can borrow will vary from one bridge lender to the next, and this could be anywhere from £25,000 to £25 million, although this too will depend on the level of security you can offer when applying for your loan.