Could using a Lifetime Mortgage be the Answer for a Later-Life Divorce Settlement?
Unfortunately, figures show Divorce is a growing trend among the over 60s. (source)
For some, divorce can represent a brand-new start. For many it will be an emotional and difficult upheaval that can have a serious negative effect on the couple’s finances.
Often one of the partners will want to stay in the family home. This could mean selling up and splitting the equity to buy two smaller properties. This is the usual arrangement but isn’t always the desired option for one of the parties involved. As well as the emotional and financial difficulties of moving, silver separators are faced with fierce competition from first time buyers. Sought-after smaller homes can become less affordable as competition is steep.
Retirement is also becoming increasingly expensive. With low interest rates, it’s even more difficult to generate an income from an investment portfolio of bonds or equities. Coupled with increasing life expectancy, pension pots and other savings now have to stretch further. Adding divorce into the mix can significantly impact people’s retirement planning.
And then there are pensions. A pension may have been enough to support one household comfortably. But, when split across two, it may not be enough. Some divorcees may have fought to stay in the family home, only to find that this leaves them with a valuable physical asset – the property – but insufficient income to live on.
Could a Lifetime Mortgage Help?
A lifetime mortgage can provide additional income at an expensive time. You could release money from their home in a lump sum to help cover costs such as legal fees.
The money released could enable one partner to effectively ‘buy out’ the other. This would allow your clients to separate without selling the family home. This could avoid some of the emotional stress and upheaval of moving.
If the family home is sold, each partner could use their settlement as a deposit along with a Lifetime Mortgage to buy a new property. If you wish to make payments to the new mortgage you can, if you are unable to afford to do so then the Lifetime Mortgage allows you to buy a home that suits your needs with no payments required with the interest rolling up and the debt repaid at the time of your death or when moving into full time are.
It could even help your clients with a pension sharing order dispute. If one person wishes to keep their final salary pension as part of a divorce settlement, a Lifetime Mortgage can provide an alternative way of releasing a lump sum from their property to settle instead.
Either way, getting professional independent advice is imperative. Feel free to contact us or send us a request for a Free Equity Release brochure by clicking here.