Many older divorcees are struggling to pay the mortgage post-split, according to figures from LEBC.
The financial planning firm is placing greater focus on equity release options, highlighting that, by 2037, almost one in every 10 people going through divorce will be aged 60 or above.
The firm also predicted that between now and 2032 there will be 40,000 interest-only mortgages maturing annually, with no repayment vehicle. These stats emphasise its concern that older people with mortgages and/or other debts may need to take on new borrowing options to ‘buy out’ a former partner.
Since 2017, equity release lending has risen substantially, with lending likely to reach £3 billion (according to data from the Equity Release Council) and set to rise even further if trends continue.
Kay Ingram, director at LEBC, said: “The equity release products now available are cheaper and much more flexible than they once were. Borrowers do not need to sell their home or any part of it, do not need to allow interest to accrue/roll up if they do not want to and can even make repayments of the debt if they can afford to.”
Unlike general mortgages, equity release lending is an area where it is compulsory for potential borrowers to take advice. Prior to an equity release loan being arranged, members of the Equity Release Council also require independent legal advice to be taken.
Ingram continued: “Members of the Equity Release Council only offer products which contain a no negative equity guarantee. Equity release can also be used to purchase a new property and does not have to be taken from an existing one.”
“This can also be useful in a divorce scenario and family lawyers may increasingly need to consider it as part of the solution for older divorcees,” she said.
“Coupled with our pensions on divorce expertise, our membership of the Equity Release Council and the Society of Later Life Advisers enables us to offer a complete package to family lawyers and their clients.”