The classic Ontario estate is house-rich and cash-poor: a valuable property, a modest bank account, and a queue of bills that will not wait for probate. Estate Administration Tax is due as a deposit when the application is filed. A mortgage — or worse, a reverse mortgage on a 180-day clock — is accruing daily interest. Insurance, property tax and utilities march on. As a mortgage broker who works on estate files, liquidity is the problem I am brought in to solve most often. Here are the tools, honestly priced.
Why the cash crunch happens
Three timing mismatches create it. First, the biggest costs come earliest: the EAT deposit (about 1.5% of estate value above $50,000) is payable up front, and secured debts become enforceable long before beneficiaries see a dollar. Second, the deceased’s accounts are frozen while the asset that holds the value — the house — cannot be sold until the Certificate of Appointment issues. Third, banks generally will not refinance a property still registered in a deceased person’s name: they want probate, a transmission of title, and a living, qualifying borrower. The result is a gap of months in which the estate has obligations but no engine of cash.
The cheap solutions first
Not every gap needs a loan. Banks will often issue a draft directly from the deceased’s own account payable to the Minister of Finance for the EAT deposit — they release funds for that specific purpose even while the account is otherwise frozen, at their discretion. Estate trustees and beneficiaries can advance funds personally and take documented reimbursement. Courts can, in narrow illiquidity cases, defer the EAT on an undertaking. And lenders holding the deceased’s mortgage will sometimes grant extensions where the executor communicates early with a credible sale plan. Exhaust these before pricing debt.
When the estate does need money: the borrowing menu
Two structures dominate. An inheritance advance or estate loan is secured against an expected distribution — no charge on the property, repayment when the estate pays out; several Canadian firms offer these, typically without credit checks, priced accordingly. A private mortgage on the estate property is a registered charge, usually interest-only for six to twelve months. Current Ontario market context: private first mortgages generally run in the 8–10% range in urban markets (higher for rural or high-ratio files), second mortgages roughly 10–13%, with combined lender and broker fees commonly 2–5% — so the effective annual cost of a one-year private deal can approach the mid-teens. Loan-to-value rarely exceeds 75–80%. Expensive money? Yes. But a six-month bridge on a fraction of the home’s value is routinely far cheaper than a forced power-of-sale disposal, lapsed insurance on a vacant home, or a fire-sale price accepted under deadline pressure. The arithmetic, not the rate, should make the decision.
Authority: the question lenders ask first
An executor’s power to borrow against estate property comes from the will (modern wills typically include an express power to sell, mortgage or otherwise deal with property), from the consent of all capable beneficiaries, or from a court order. Borrowing without one of those three exposes the trustee personally. Some private lenders will underwrite before the certificate issues where the will’s authority is clear and equity is strong, but funding generally aligns with the legal steps. Where the estate is in litigation, only a court-appointed trustee with borrowing authority in the order can pledge the asset — another reason the neutral-caretaker motion matters early in contested files. And a note on the regulatory side: in Ontario, private mortgages must be arranged through appropriately licensed mortgage professionals, with written disclosure of fees, conflicts and material risks in advance — an estate trustee should expect, and demand, that paper trail.
Two special missions: stopping power of sale, and sibling buyouts
If a lender has already issued a Notice of Sale, the estate is not out of options: in Ontario the mortgagor can generally redeem by paying the arrears plus enforcement costs before a binding sale agreement is accepted, and equity lenders regularly approve rescue refinancings in days. Every week of delay adds legal costs to the payout, so speed is the strategy. The second recurring mission is the beneficiary buyout: one heir keeps the house and pays out the others. Once the estate can transfer title, the buyer’s inherited share is commonly treated as equity toward the financing, and the deal is underwritten like any purchase or refinance — the buyer must qualify on income and credit. Structuring it correctly (and pricing the buyout off a defensible appraisal) prevents the two classic failures: a mortgage that doesn’t close, and siblings who feel shortchanged.
Frequently asked questions
How do we pay the probate tax when all the money is in the house?
In order of cost: a bank draft from the deceased’s own account payable to the Minister of Finance, a documented advance from a trustee or beneficiary, an estate loan or inheritance advance, a private mortgage on the property, or a court-approved EAT deferral in genuine illiquidity cases.
Will a bank refinance a house still registered to the person who died?
Effectively no. Expect to need the Certificate of Appointment, a transmission of title to the estate trustee, and a living borrower who qualifies — or a private lender in the interim.
What does private estate financing cost in 2026?
Roughly 8–10% for first mortgages and 10–13% for seconds in urban Ontario, plus 2–5% in combined fees, interest-only over 6–12 months, at up to about 75–80% loan-to-value. Rates vary with equity, location and file quality — get the disclosure in writing.
Can we stop a power of sale on an inherited home?
Usually yes, if you act before a binding sale agreement: redeem by paying arrears plus costs, refinance with an equity lender, or complete your own sale. The window closes fast and enforcement costs compound — treat it as an emergency.
Does the executor become personally liable for an estate loan?
Not if it is properly authorized and documented as an estate obligation — but borrowing without authority from the will, the beneficiaries or the court is a personal risk. Get the authority question answered before the rate question.
The bottom line
Estate liquidity is a bridge-building exercise: match a short, honestly-priced instrument to a defined gap — probate delay, a mortgage payout, a buyout — and retire it the moment the sale or distribution lands. The estates that overpay are rarely the ones that borrowed; they are the ones that waited until the deadline chose the terms.
Gurpinder Gaheer, BA (Hons), MBA, is a dual-licensed real estate broker and mortgage broker serving families, estate trustees and their advisors across Ontario. His practice includes estate and probate property sales, reverse mortgage payouts, bridge and private financing for estates, and beneficiary buyout structuring. You can reach him through gaheer.com/.
This article is general information, not legal, tax or financial advice, and rates change with the market. Mortgage brokering services are provided through a licensed mortgage brokerage with full regulatory disclosures. Always consult a qualified Ontario estates lawyer about authority to borrow before pledging estate assets.