What Banks Do Inheritance Loans?
It is far from uncommon to require third-party financial support to meet what can often be quite ludicrous inheritance tax (IHT) requirements. The issue is that, until this bill is settled, heirs and beneficiaries are essentially locked out of their owed assets.
Precisely where an inheritance loan can help, but how exactly does such a facility work, and where can they be accessed in the UK?
Inheritance loans: the basics
An inheritance loan is a bespoke financial product designed to help beneficiaries access some of their owed funds early while waiting for the distribution of inheritance via probate. The maximum loan amount issued is based on the value of the expected inheritance, which also acts as a form of security for the loan.
The lender will assess the value of the inheritance and request supporting documentation, such as a will or probate documents, before providing the loan. Maximum loan sizes are usually capped at 60% to 80% of the total combined value of the owed assets, while interest and borrowing costs are agreed upon in advance and fixed.
Inheritance loans are a popular and surprisingly accessible solution that lets you access what is rightfully yours without waiting for full settlement of the estate. Something that can sometimes drag on for months or even years.
Do banks do inheritance loans in the UK?
Several major banks in the UK provide inheritance loan facilities or advisory services, including Barclays, HSBC, Lloyds Bank, and Metro Bank. They all have distinct application processes, eligibility criteria, and probate loan packages designed to cater to different customer needs, some of which are offered in an advisory capacity only.
Barclays offers their help and support via their wealth planners, experienced advisers who guide beneficiaries through the process. HSBC offers bereavement support and inheritance tax advice (for account holders who meet certain financial requirements), while Lloyds Bank and Metro Bank also offer bespoke inheritance-related support for their customers.
However, it’s worth noting that while these major banks offer some form of support, it doesn’t necessarily translate to the best deals. Probate loans from major banks often come with high rates of interest and elevated borrowing costs. Moreover, the process of organising an inheritance loan with a major can be time-consuming and complex.
Finding a better deal
In most cases, a more beneficial option is to seek out specialist lenders via an independent broker. Experienced brokers combine extensive knowledge of the sector with strong relationships with specialist lenders, enabling them to access deals that are not available on the High Street.
By comparing the rates, fees, and terms from an extensive panel of lenders, they can help secure the best possible deal, ultimately saving you money and time.
Importantly, an independent broker can also provide you with the objective advice you need to make an informed and confident decision. Something that is of great importance when dealing with matters as significant as inheritance and probate.
How it works
Though all lenders impose their own application policies, the same basic principles apply in all instances.
Here’s a step-by-step look at how the probate advance application process works:
- Eligibility assessment: You contact a probate advance provider via a broker who assesses your eligibility based on the value of your inheritance.
- Paperwork and verification: If you qualify, the provider will then complete some paperwork and verify your inheritance details.
- Flexible funding: Once approved, you receive the funds. The amount can vary, but it’s typically about 60% to 80% of your expected inheritance.
- Repayment: The advance is repaid, plus fees, from your inheritance’s proceeds once the estate is settled.
The benefits of probate advance
Choosing a probate advance to deal with the complexities of probate can be beneficial in many ways:
- Fast access to funds: You won’t have to wait through the lengthy probate process to access a portion of your inheritance.
- No credit check: As the advance is secured against your share of the inheritance, your credit score is not a factor in approval.
- No monthly payments: You pay back the advance in full only when the estate is finally settled.
- Low risk: You know you are due a windfall in the near future, so there is little to no risk you will be unable to repay your debt.
- Predictable costs: All fees and charges are fixed in advance, so there are no surprise costs later on.
In summary
Irrespective of your preferred provider, a major bank or a specialist lender, it is essential to perform due diligence before applying. Understanding the terms and conditions of your inheritance loan is paramount to making an informed decision, which is again where the input of a skilled broker can prove invaluable.
For more information on inheritance loans or to arrange an obligation-free quotation, contact a member of the team at UK Property Finance today.