Short answer
A private mortgage can sometimes fund a buyout of other beneficiaries during probate, or shortly after, when a bank wants fully settled title first. It generally works once the buying beneficiary can legally deal with the property, usually when probate is granted or the executor confirms the sale can proceed, and there is enough equity to cover the buyout.
Why a bank is often the wrong first call here
Banks generally want clean, settled title and a straightforward chain of ownership before they advance funds, so a property still moving through probate can slow or stop a conventional application even when the equity and the buyer’s ability to pay are not in question. A house left to several children or other relatives under a will is a common example. One beneficiary wants to keep the property and buy out the others, but title is not yet fully transferred, and more than one name can be involved in dealing with the property until that is sorted out.
A bank’s underwriting process is built around a single, settled owner and a clear title search, which does not fit cleanly with a property mid-probate, regardless of how strong the buying beneficiary’s income or credit is. The property, the equity, and the buyer can all be fine, and the file still gets held up on title alone.
How a private lender can proceed
A private lender’s decision rests mainly on the property’s equity and on confirmation from the executor or the estate’s lawyer that the transaction can proceed, rather than on waiting for every administrative step of probate to be fully wrapped up. Where a bank sees an unfinished process, a private lender is often willing to treat the file as an equity decision once the legal side confirms the buyout can move forward.
The exact point at which a lender can fund varies by file and by the estate’s own legal situation. Confirm the current timing with the estate lawyer or the executor rather than assuming it from a general guide, since no two estates move through the same steps at the same pace, and coordination on this happens between your lawyer and the estate’s lawyer, not the mortgage broker.
Pekoe Mortgages is a licensed mortgage brokerage, regulated by FSRA under Licence #13321 for Ontario clients and licensed with RECA for Alberta clients, and neither we nor any lender can confirm what stage of probate a specific estate has reached. A private lender weighs equity and legal confirmation that the sale can proceed, not every probate deadline itself.
What has to be true for this to work
Three things generally have to line up. First, the buying beneficiary has to actually be able to proceed legally, which is a question for the estate lawyer, not the mortgage broker. Second, the other beneficiaries have to agree on the buyout amount itself, since a joint inheritance only becomes a clean buyout once everyone with a share has agreed to the number through the estate’s own process.
Third, there has to be enough equity in the property to cover the buyout payment plus the private mortgage’s own costs. If the numbers do not leave enough room once those costs are added, the file does not work regardless of how well the legal side is sorted out.
What it costs
Read the full guide for Private Mortgage Lending in Alberta or Private Mortgage Lending in Ontario, where typical ranges for rates, lender fees, broker fees, loan-to-value, and term are set out in full. Every figure varies by file and none of them is a quote.
The exit
A private mortgage in this situation is usually a bridge, not a permanent solution. Once probate has fully closed and clear title sits solely in the new owner’s name, refinancing into a conventional mortgage at ordinary rates is generally the next step, so plan for that exit before you sign the private mortgage, not after.
Frequently asked questions
Do all the beneficiaries have to agree to the buyout amount?
Yes. If the other beneficiaries do not agree on the amount, that is a matter for the estate and its lawyer to resolve, not something financing can solve on its own. A private lender needs to see that agreement in place before funding a buyout.
Does probate have to be fully granted before any financing can happen?
Not always, but this varies by file and by province, so confirm the current position with the estate lawyer or the executor rather than assuming a timeline. Some estates can support financing once probate has been granted, and others need a further step first depending on the specifics of the estate.
Is this different from a spousal buyout?
Yes. A spousal buyout involves a separation or divorce between two spouses on an existing mortgage, which our guide on spousal buyout versus refinance covers in full. A probate buyout involves beneficiaries of an estate and the executor, and the legal questions around title are different in kind.
Who pays for the appraisal and legal costs in a buyout like this?
The buying beneficiary generally covers the appraisal and their own legal costs, and often the estate’s legal costs tied to the transfer as well, though the exact split depends on the estate and any agreement among the beneficiaries. Confirm who pays for what with the estate lawyer before you commit to a buyout number.
