Being a named beneficiary of a deceased person’s estate often brings unexpected obstacles and financial burdens. One of which could be your obligation to pay inheritance tax (IHT), which, depending on the size of your inherited estate, could amount to a major headache.
With the current IHT threshold in the UK standing at £325,000, IHT bills can often amount to sums that are simply insurmountable. Beyond this threshold, you will need to pay an IHT of 40% of the combined value of all assets you will eventually take ownership of.
To gain legal access to your inheritance, you may have to look for ways to finance these bills with third-party support. This is where probate bridging loans can come into play as an accessible, affordable, and convenient option.
Understanding probate bridging loans
Probate bridging loans, one of many types of specialist inheritance loans, are a type of short-term loan that beneficiaries can use to pay off IHT and other related expenses, such as probate costs and legal fees.
As the name suggests, they are designed to ‘bridge’ the financial gap between the time the inheritance is announced and when it is actually received, which can often be a lengthy process. Sometimes several months or even years.
The benefits of probate bridging loans
There are several unique features and benefits that have made probate bridging loans an increasingly attractive option for beneficiaries as of late:
- Fast funds: Unlike regular mortgage loans that might take extended periods for approval and disbursement, probate bridging loans can be arranged in a few working days. This is particularly helpful when beneficiaries need to meet urgent tax obligations.
- Flexible loan size: Probate bridging loans have no maximum loan size, meaning the amount you borrow is tailored to your unique needs and is usually based on the value of the inherited property.
- Competitive rates: Interest rates for these loans can start as low as 0.5% per month, making the borrowing costs much lower compared to long-term loans.
- Poor-credit applicants welcome: Bridging loans do not discriminate against poor-credit applicants and often do not require proof of income. This opens the door for many beneficiaries who might otherwise struggle to qualify for a loan.
- Early repayments: Most bridging loan lenders will offer the option to repay the loan early without incurring penalties, providing yet another benefit for beneficiaries.
Contact UK Property Finance
At UK Property Finance, we provide access to a broad range of specialist funding solutions for heirs and beneficiaries faced with an impossibly high inheritance tax bill. With our help and support, negotiating during one of life’s toughest times can be made much less daunting, with the representation and objective advice you need to make the right decisions.
For more information on any of the above or to discuss your requirements in more detail, call or email the UK Property Finance team anytime.