Our Lenders
We work with trusted brokers to give you access to a panel of leading lenders well placed to meet your needs at the lowest rates.
A beneficiary loan is a type of loan that allows beneficiaries of an estate to access up to 60% of their future inheritance within days. This type of loan can provide beneficiaries with access to the funds they need when they need them, rather than having to wait until the probate process is complete.
Beneficiary loans are a useful option for individuals who require immediate access to funds but do not want to wait until the probate process is complete. The loan is repaid to the lender when the inheritance is available to be distributed, with no monthly repayments and no early repayment fees.
We are partnered with FCA-authorised Provira who can help with your application from start to finish.
Representative Example
A £100,000 advance will incur an Arrangement Fee of 1.5% (£1,500). Interest will be calculated on the advance plus the fee, and this interest accrues daily based on an annual fixed rate of 18.2%. Assuming the Estate takes 12 months to liquidate, you would owe £18,440 in interest plus £101,500 in capital and fees, resulting in a total balance owed of £119,940 and a representative 19.9% APR.
How Does a Beneficiary Loan Work?
A beneficiary loan is a type of loan that enables beneficiaries of estates to access funds before probate is granted. The loan amount is based on the estimated value of the estate and can be used for any purpose. The loan is repaid to the lender when the inheritance is available to be distributed, with no monthly repayments and no early repayment fees.
This means that the borrower does not have to make any payments until the inheritance is available to be distributed, which can provide peace of mind and flexibility in managing finances. The loan is repaid out of the proceeds of the estate, so the borrower does not need to use their own funds to repay the loan.
What Are the Fees Associated With a Beneficiary Loan?
There is an arrangement fee of 1.5% of the loan amount plus 1.5% per month. Simple interest is charged, not compound interest, resulting in potential savings compared to other providers that charge compound interest. This means that the borrower knows exactly how much they will need to repay, and there are no surprises. The borrower will be aware of the total amount of interest that will be charged at the outset of the loan, which can help with financial planning.
Do Beneficiary Loans Give Any Risk to the Borrower?
No, there is no risk to the borrower. If the inheritance turns out to be less than expected, the borrower will not be required to pay the shortfall. This means that the borrower is not at risk of incurring any financial losses if the value of the estate turns out to be less than expected. The borrower is only required to repay the loan out of the proceeds of the estate, and they will not be required to use their own funds to repay the loan.
Can a Beneficiary Loan Be Used for Any Purpose?
Yes, the loan can be used for any purpose. It is up to the borrower to determine how they wish to use the funds. This means that the borrower can use the funds for any purpose that they see fit, whether it be:
- Paying off debts
- Financing a new business venture
- Making home improvements
- The borrower has complete control over how they use the funds.
How Long Does It Take To Receive a Beneficiary Loan?
The loan can be received within days, enabling beneficiaries to access the funds they need quickly and efficiently. This comes in contrast to how long it takes to receive inheritance without the use of a beneficiary loan: the average time it takes to access an inheritance in the UK is one year.
A beneficiary loan means that the borrower does not have to wait for an extended period of time to access the funds they need. The quick turnaround time can be especially beneficial for borrowers who require immediate access to funds.
What Happens if the Estate Is Unable to Repay a Beneficiary Loan?
If the estate is unable to repay the loan, the lender will not pursue the borrower for the outstanding amount. The lender’s only recourse is to recover the funds from the proceeds of the estate.
If the value of the estate is not sufficient to repay the loan, the lender will have to absorb the loss. This means that the borrower is not at risk of incurring any financial losses, even if the estate is unable to repay the loan in full.
What Are the Advantages of a Beneficiary Loan Compared to Other Types of Loans?
One of the main advantages of a beneficiary loan is that it enables beneficiaries to access funds quickly and efficiently, without having to wait for the probate process to be complete. This can be especially beneficial for individuals who require immediate access to funds for various reasons, such as paying off debts or financing a new business venture.
Another advantage of a beneficiary loan is that it is assessed solely on the value of the estate, not personal circumstances or credit rating. This means that individuals with poor credit ratings or who are unable to provide collateral are still eligible for a beneficiary loan. There are also no charges over property, so the borrower’s property is not at risk.
What Are the Disadvantages of a Beneficiary Loan Compared to Other Types of Loans?
One of the main disadvantages of a beneficiary loan is the cost. The arrangement fee of 1.5% of the loan amount plus 1.5% per month can be higher than other types of loans. Additionally, the loan amount is limited to 60% of the estimated value of the estate, which may not be sufficient for some borrowers.
Another potential disadvantage is that the loan is secured against the inheritance, which means that the borrower may not be able to access the full amount of their inheritance when it is finally distributed. Finally, the borrower will need to be aware of the total amount of interest that will be charged at the outset of the loan, as there may be potential savings compared to other providers that charge compound interest.
Are There Any Alternatives to a Beneficiary Loan?
Yes, there are alternatives to a beneficiary loan. One alternative is to obtain a personal loan from a bank or other financial institution. However, personal loans may be more difficult to obtain if the borrower has a poor credit rating or is unable to provide collateral.
Another alternative is to obtain a credit card or line of credit, but these options may also be more difficult to obtain if the borrower has a poor credit rating. Ultimately, the best option will depend on the borrower’s individual circumstances and financial needs. It is important to research and compare different options before making a decision.
Who Is Eligible for a Beneficiary Loan?
Beneficiaries can access funds regardless of whether the deceased left a will or not. Applications for beneficiary loans are assessed solely on the value of the estate, not personal circumstances or credit rating.
This means that individuals who have a poor credit rating or who are not able to provide collateral are still eligible for a beneficiary loan. There are no charges over property, so the borrower’s property is not at risk.
The terms and conditions may differ based on the specific circumstances of the estate, however, so it is beneficial to read them over.