Bridging Loan to Pay Inheritance Tax Bill Before Selling Inherited London Property to Cover Costs

Bridging Loan to Pay Inheritance Tax Bill Before Selling Inherited London Property to Cover Costs

Area
Central London
Capital Raised
£360k

The Scenario

In this case, the clients approached a broker in a unique situation requiring much personal care and sensitivity.

The client was a young woman who had just lost their mother. They had lived together in their family home for her entire life, so it was a challenging transition period for the client.

Our client had no other siblings or family of any kind and was tackling the administration of processing her mother’s estate by herself.

There was a small outstanding mortgage in her mother’s name secured against the property at the time of her death, and the client was still waiting for probate to be confirmed for the estate.

However, she needed to pay an outstanding inheritance tax liability of 10% before the property could be passed into her name. The client had no savings or assets to liquidate to cover the bill. Her only option was to sell the property, worth approximately £900k, which she couldn’t do until it was transferred into her name. So, a Catch 22.

She had approached multiple finance brokers to see if she could arrange a short-term loan to pay for the tax bill, to then be repaid upon the sale of the property once it was in her name.

However, she’d been turned away by every broker she’d spoken to because they couldn’t secure a loan against a property that wasn’t legally in her name – and it wouldn’t be until she’d paid 10% of the IHT bill that this would happen.

To make matters even more complicated, the client also had:

  • No income
  • No credit score
  • Additional credit card debts

The Solution

Contacting a specialist bridging lender was the clients’ last hope. They needed to speak to somebody with years of experience, extensive knowledge, and the right connections to explore every possible solution.

Through 3-4 months of dedicated work alongside the clients’ solicitor, their broker managed to push this case through with a specialist lender that they worked closely with, who was able to take a comprehensive overview of the clients’ situation.

While they would normally reject such an extraordinarily complicated proposal, the additional context and legal reassurances provided by the broker and solicitor gave the lender enough comfort to eventually offer a bespoke bridging loan secured against the property that was technically still in her mother’s name.

They provided a 12-month bridge loan of £360k that covered:

  • The late mother’s outstanding mortgage on the property
  • The entire inheritance tax bill
  • The cost of refurbishments to the property that would be carried out before its sale
  • And living costs throughout the loan term while the property was being sold.

And the loan was arranged to be paid out as soon as Probate came through so that they could act immediately.

The loan would be repaid upon the sale of the property, and the 12-month term allowed our client to carry out work on the property and give it time on the market to realise its full potential value.

The value of the bridging loan came to 40% of the property's value (40% LTV).

And finally, the interest on the loan was also rolled up to be repaid at the end of the term or upon loan redemption, ensuring that the client had sufficient cash flow for the year and didn’t have to worry about monthly interest repayments.

The bespoke finance solution completely transformed the client's options in front of them. It provided her with the invaluable peace of mind that she could resolve her financial situation and move forwards to the next chapter of her life.

 

Louis Levine

Finance Executive CeMAP

Bristol

0117 457 7862

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George Abouzolof

Finance Broker

Bristol

0117 403 3444

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Bridging Team

Clifton Private Finance

Bristol

0117 959 5094

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Sam Baker

Finance Broker

Cardiff

0117 959 5094

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As a specialist bridging adviser at Clifton Private Finance, I can take a holistic view of your situation and find the right finance solution for you. Book a free telephone consultation with me at a time to suit you 

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Fergus Allen

Finance Broker

Cardiff

0117 959 5094

Are you in a similar situation? I specialise in bridging finance at Clifton Private Finance - I will find you the best funding solution for your property transaction.

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Jacob Phipps

Finance Broker

Bristol

(+44) 0117 959 5094

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I specialize in helping international clients source residential and investment property finance for UK property. Book a free telephone consultation with me at a time to suit you 

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Jack Spillane

Finance Broker

Bristol

0117 959 5094

Is your situation similar to this? I specialise in helping clients who need creative development finance solutions, and second-charge mortgages. Give me a call any time and we can set up a detailed discussion of the finance you need. customDatabaseField-8455

Mathew Phillips

Senior Finance Broker

Bristol

0117 959 5094

Are you in a similar situation? I specialise in bridging finance at Clifton Private Finance - I will find you the best funding solution for your property transaction.

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Alex Chambers

Senior Finance Broker

Bristol

0117 403 4324

Are you in a similar situation? I am a specialist in residential and investment property finance for UK and international clients at Clifton Private Finance. Please don't hesitate to get in touch for a no-cost discussion of the finance you need.

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Luther Yeates

Senior Finance Broker

Bristol

0117 244 5561

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Sam ONeill

Senior Finance Broker

Bristol

0117 959 5094

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I am a bridging finance specialist at Clifton Private Finance. I can find a quick, cost-effective solution for the funding you're looking for. Book a free telephone consultation with me at a time to suit you 

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Robert Gibb

Senior Finance Broker

Bristol

0117 959 5094

Are you looking for mortgage or short-term finance for residential or buy-to-let property (including HMOs)? I have extensive experience in finding property finance solutions for UK and international clients, both as individuals and limited companies. Please give me a call and let me see what I can do for you.

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Adam Arnott

Associate Director

Bristol

0117 205 0214

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