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 |
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| 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.
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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.
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The estate of my mother has been in the works for 2 years and is near closing. The family home just closed escrow and we are waiting for a court date of the accounting of all monies. My lawyer says approx. 60 days until the funds are disbursed to us three heirs. I am in a tight financial situation at the moment and would like a to know my best alternative to get advanced on my inheritance which is split evenly among us. About $250,000. Each. Since we have such a short time left what is my best option on getting a small advance like $10,000. Or $20,000.
Hi Francine,
Thanks for getting in touch with finder. I hope all is well with you. :)
As what our page mentioned, one of your options includes inheritance funding. You may want to review the information on this page before you look lenders who provide inheritance funding. However, please note that inheritance funding can come with steep fees that range from 10% to 40% of your inheritance value.
If in case this isn’t something that you don’t want to use, you may want to seek other alternative options like getting a personal loan from other providers. On this page, you will also find a table above that compares other lenders. Once you found the right one for you, click on the “Go to site” green button to be redirected to their website.
Please review the criteria, details of the loan product and contact the lender directly to discuss your loan options and eligibility.
I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.
Have a wonderful day!
Cheers,
Joshua