2nd May 2018 | By Ben Lloyd Closed vs. Open Bridging Loans – What’s the Difference? Your Complete Guide to Bridging Finance for Land Losing a close friend or relative can be both a sad and stressful time, which is only exasperated by the amount of paperwork and organising you have to do if you’ve been appointed executor of their estate. Sorting through their finances can be arduous and may have you wondering, as a beneficiary, can you inherit debt? And, if so, can a bridging loan be used to help cashflow issues? What Happens to Loans When Someone Dies? Here in the UK, when someone dies, no one else becomes responsible for the individual’s sole debts, but money owed is paid out of their estate by the executor of the estate or the administrator (if there wasn’t a will) before assets are divided and passed on to beneficiaries. Please note: If a mortgage or loan was joint and severally liable or subject to a guarantor, then the surviving party will become liable for the outstanding balance. If there isn’t enough money in the estate to pay off any outstanding debts, then these should be paid in a set priority order (before giving anything to beneficiaries named in the will) until the money runs out. In some cases, if the deceased had life insurance, the pay-out will cover the full amount owed on any mortgages. However, this is not guaranteed. We would always recommend speaking to a trained probate solicitor for expert advice on dealing with complex probate issues. Could a Bridging Loan Help? Technically a regulated bridging loan could be used by beneficiaries to pay legal fees and inheritance tax straight-away to help avoid a rushed, below-value sale of the deceased’s property in order to pay off debts and fees. However, we would not recommend using this high-interest form of short-term finance, unless it is a last resort. As a commercial finance broker, we generally arrange commercial unregulated bridging loans for meeting transaction deadlines, chain break finance, property auctions and refurbishments. You can find out more about this on our bridging finance page. If you have any further questions about the possible uses of a bridging loan, please do call our team on 02920 766565 to learn more.