The probate process can take months or even years to complete, which could cause financial hardship to a decedent’s heirs. If you need money faster, an inheritance loan can help cover expenses now while you wait to receive your inheritance. Getting a probate loan can be a convenient way to tap into your inheritance early, but it may come with high rates and other potential drawbacks.
Inheritance loans — which are also called probate loans, estate loans or inheritance advance loans — should not be confused with probate or inheritance advances. Probate advances are not loans, and you don’t have to pay them back out of pocket. An inheritance loan, on the other hand, is a type of loan that uses your inheritance as collateral.
Inheritance Funding probate advances
| Min. Loan Amount | $5,000 |
|---|---|
| Max. Loan Amount | $350,000 |
| APR | N/A |
| Interest Rate Type | Fixed |
| Turnaround Time | As little as 3 days |
A probate loan is a type of secured loan that lets you borrow against your inheritance, using the inheritance as collateral. It’s meant to bridge the gap between the time someone dies and when your inheritance funds are distributed from the estate.
Similar to a more traditional loan, you’ll typically be charged a fixed interest rate and repay the loan in equal monthly installments. However, because a loan backed by your inheritance is considered riskier than a loan secured by a fixed asset — like a house — it can be more difficult to find lenders that offer these loans.
Most traditional banks and credit unions typically don’t offer these loans, so you may need to go to a hard money lender. Hard money loans are typically short-term, asset-based loans offered by private lenders or investor groups rather than banks.
Interest rates for probate loans are usually higher than other loan types and may also come with steep fees. Some lenders that offer inheritance loans require interest-only payments during the probate process. Then, you’ll repay the principal once you receive your inheritance.
Probate loans allow heirs or beneficiaries to tap into their inheritance while it’s still in probate. First, you’ll have to contact a lender that offers inheritance loans. The lender verifies the estimated amount of your inheritance and will most likely contact the executor or whoever is handling the distribution of the estate.
Once the inheritance is verified, the lender comes up with a loan offer and interest rate. The loan amount and rate depend on the size of the inheritance, the complexity of the estate, your creditworthiness, your income and other factors.
If you accept the terms, the loan proceeds are disbursed, and you’ll typically repay the loan in equal monthly installments. In most cases, you can repay the rest of the loan in full once you get your inheritance.
Unlike a probate advance — which typically only charges a flat fee — inheritance loans typically charge interest and fees. Interest rates may range between 10% and 18% of the loan amount, but the exact rate will depend on the loan amount, your credit score, your income and other variables. You may also have to pay origination fees, “arrangement” fees or other charges on top of interest, which vary by lender.
You can play around with how much your loan may cost by entering a loan amount, term and interest rate.
|
Your loan
|
|---|
| Loan amount |
|
$
|
| Loan terms (in years) |
|
|
| Interest rate |
|
%
|
or
Compare more lenders| Principal | $ |
|---|---|
| Interest | $ |
| Total Cost | $ |
Inheritance loans are best for heirs or beneficiaries who need access to funds before the money is distributed from the estate. For example, if you have a mortgage to pay or other living expenses, getting an inheritance loan may help you get by until you receive the full inheritance.
However, if your plans for the money can wait, you may want to hold off on a probate loan or seek another alternative. For instance, if you want to buy a house and use your inheritance for the down payment, you may want to wait — and save yourself some money — until the probate process is complete.
There are good reasons to take out a loan against your inheritance, but it has drawbacks.
Follow these steps to find and apply for an inheritance loan:
You’ll have to meet the usual requirements needed for a loan, such as proof of income and identity, employment verification and credit check. But lenders also want proof of your right to an inheritance with specific documentation:
Along with meeting standard loan criteria, using your inheritance as collateral comes with additional requirements:
Inheritance loans and probate advances both solve the problem of gaining access to your inheritance before probate is complete, but they have some key differences.
An inheritance advance is a cash advance — not a loan — where you basically sell a portion of your future legacy in exchange for cash now. There are no monthly payments or interest charges to worry about, but you pay a flat fee of around 10% to 50% for the service, which may not be worth it. Still, a probate advance could make sense if you really need the money, don’t qualify for other loan options or can’t afford another monthly payment.
An inheritance loan, on the other hand, is much like a more traditional loan that uses your inheritance as collateral for the loan. You’ll have to make monthly payments and pay interest, but ideally, you can pay off the majority of the loan once the estate releases your inheritance.
Inheritance loans can be hard to find, though, and may come with high rates and fees. You may want to consider an inheritance loan only if you’ve exhausted your other options and can afford the monthly payments.
Waiting months or years for an estate to get through probate can put a huge financial burden on loved ones left behind. An inheritance loan can help to solve that dilemma by giving heirs access to inheritance funds long before probate is complete, but it’s an expensive type of lending. You may want to consider other options, such as personal loans or home equity financing, before you take a bite out of your inheritance with high interest rates and hefty fees.
It depends. There are less expensive loan options, but if you aren’t eligible for more traditional loans or you don’t own a house, an inheritance loan is an alternative. It’s important to determine if you really need the money now or if you can afford to wait and save yourself some money.
You may be able to take a loan against a house you inherited if the property has enough equity to borrow against. For example, if the house is paid for, you should be able to qualify. But if the house has a mortgage and very little equity, you probably can’t get a loan using it as collateral.
Good credit usually helps you get better rates on loans. However, because inheritance loans aren’t typically offered by traditional banks and credit unions, your credit score may not have as much impact on loan approval. Probate lenders are more likely concerned with the value of your collateral (i.e., inheritance) than your credit.
Review of United Club Lending, including loan terms, rates and alternative debt reduction solutions.
Lift is a debt consolidation lender that offers quick funding but lacks transparency.
Quick funding from a lender that accepts below-average credit, but origination fees apply.
Get loans with unique rate reductions and options for debt consolidation, even with lower credit.
A peer-to-peer lending platform where you can check loan offers without damaging your credit.
Avant offers fast funding and flexible repayment terms for fair credit borrowers with an easy online application.
Upstart provides quick funding for less-than-stellar credit borrowers by utilizing unique underwriting requirements.
Marketplace for loans up to $15,000 with quick approvals and options for all credit types.
Borrow up to $40,000 online with competitive rates and fees. Find out your potential APR with a LendingClub loan without it affecting your credit score.
Fast funding for fair credit borrowers who need small loans.
My mother passed and myself, my sister and my brother are expecting a modest inheritance from her death. She had no will and no outstanding debts or creditors. The only thing she had was her house she owned outright. It is currently I probate and I just am going through a divorce and am without a place to live while I search for a rental with my section 9 voucher. I’m disabled and am currently without a home. I was thinking of an inheritance advance yes or no and where should I go? Thank you
Hi Mary,
Thank you for reaching out to Finder.
You may need to speak to your siblings to allow you to stay in the house until the probate is done but this is with them agreeing to it. If you are looking for an inheritance advance, you might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. Hope this helps!
Cheers,
Reggie
What would happen if I got an advance on my inheritance and it was all in my mother’s estate? However, when I went to court and the judge said the house was never my mom’s because my father never put her on the deed. So now the house is in my dad’s name. Do I have to still pay it back?
Hi Mandy,
Thanks for getting in touch with Finder. I hope all is well with you. :)
Before a lender approves your loan application, you would need to present relevant and important documents to support your claim that you have an inheritance. The lender would know during your application if you legitimately have an inheritance. For this reason, if in case the lender finds out that you don’t have any inheritance, then your loan application would be rejected.
If in case you were still approved and then in the future, you didn’t receive any inheritance, you would still need to pay back the lender by other means.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua
My parents want to sell me their house (which is paid off) Is there a type of loan(inheriting loan)out there that would be cheaper than getting a standard mortgage bank loan?
Hi Lisa,
Thanks for getting in touch! As it says on our page, Inheritance funding is a short-term form of financing that grants you access to the value of the funds or assets you’ve inherited quickly. There’s two types of inheritance funding: an advance on your inheritance and a loan using your inheritance as collateral. Neither consider your credit when you apply, and you can’t find these options with a traditional lender. First you need to check your credit score, then go back to this page to choose the credit score and the state on the table provided. It will show all the lenders for your state so you can go ahead and get started on an inheritance loan.As a friendly reminder, review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the product disclosure statement of the product and contact the lender should you need any clarifications about the loan. You may also seek help from a mortgage broker if you need further assistance as they will be able to take your circumstances into account.
Hope this helps! Feel free to reach out, we’re here!
Best,
Nikki
Does my inheritance have to be in probate to receive a loan? My trust fund is with the Bank of America US trust.
Hello Jeff,
Thank you for your comment.
Probate can be a long, drawn-out process, especially if the estate has to file a federal income tax return and wait for a return letter from the Internal Revenue Service approving the close of the estate. You may be able to get an advance on your inheritance in the form of an inheritance loan if you can’t wait
that long to access your inheritance.
When you take out a loan against your inheritance, lenders do require documentation as proof of your inheritance. This may include a copy of the will, an official death certificate, copies of the letters of administration issued by the probate court officially opening the probate proceeding and appointing the personal representative, a certification of the amount of your inheritance from the personnel administrator and your identification.
You might want to seek out legal and financial advice to make sure you fully understand what you’re getting yourself into. I hope this helps.
Should you wish to have real-time answers to your questions, try our chat box on the lower right corner of our page.
Regards,
Jhezelyn
I would like to know can an inheritance lender provide you with the total value of an inheritance after taxes if required by state. Basically can they let me know the exact amount I stand to inherit before issuing the loan
Hi Bobby,
Thanks for getting in touch with finder. I hope all is well with you. :)
Generally, it would be you who would give the figure of how much you will be inheriting. Of course, the lender can also give you advice or help you figure out your total inheritance after taxes. To obtain an inheritance loan, you would need to provide a lot of documents showing the lender that you truly has an incoming inheritance. Thus, it would be helpful if you already know the exact amount of your inheritance.
It is also advisable that you speak to experts as well as involve your friends and family to make sure you’re making the right decision for your situation.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua