Later life lending, including products like equity release, retirement interest-only (RIO) mortgages and lifetime mortgages, has become increasingly popular amongst clients in recent years. With advancements in modern medicine, more of us are living (and working!) for longer.
Here are seven reasons why clients are considering later life lending solutions:
1. Repaying existing mortgage
The most common reason borrowers look to equity release mortgages is to clear their existing mortgage, either when their normal mortgage term comes to an end or when they decide they no longer wish to make payments anymore, often due to a change in circumstances or reduction in income. This has been exacerbated by the increase in interest rates over the recent past, with some borrowers finding it difficult to meet their higher mortgage payments as a result.
2. Supplementing Retirement Income
Many homeowners find that their pension and savings may not be sufficient to maintain the lifestyle they’ve become accustomed to during retirement. Later life lending allows you to unlock the equity tied up in your property, to cover living expenses, medical costs or leisure activities.
3. Home Improvements and Adaptations
As people age, their homes may need modifications to accommodate changing physical needs. Later life lending solutions can fund these costly home improvements, for example installing stairlifts, walk-in showers, or other accessibility features. Making these changes can ensure homeowners are able to continue living comfortably and safely in their homes
4. Helping Family Members Financially
Many older homeowners consider using equity release or similar products to provide financial assistance to their children or grandchildren. This could be to help them get onto the property ladder, pay for education or assist with other significant expenses, without having to dip into savings or other assets
5. Paying Off Existing Debts
For some, retirement can bring financial challenges. In addition to repaying outstanding mortgages, some homeowners face additional secured or unsecured debt. Later life lending allows homeowners to pay off these obligations, reducing monthly outgoings and easing financial stress during retirement
6. Inheritance Tax Planning
Some homeowners use later life lending as part of their inheritance tax (IHT) planning* . By releasing equity, they can reduce the value of their estate, which may lower the inheritance tax liability for their heirs. Additionally, it allows them to give gifts to family members whilst they are still alive, potentially benefiting from exemptions or lower tax rates.
7. Divorce in Later Life
Statistics show that the number of ‘silver splitters’ are increasing. The over-60s legally separating in 2023 has doubled since 1993, and in 2022 the number of divorces in marriages of over 30 years remains the highest by far according to data from the ONS. Later life lending can help older borrowers navigate the financial complexities of divorce, such as buying out a partner or buying a new home.
In order to understand how you may benefit from later life lending solutions, our dedicated team are on hand to walk you through the options. Contact us for tailored advice from our award winning advisers: 020 3903 9875 or complete our contact form.
*If you are thinking about exploring IHT, we would suggest you speak to a tax professional before making any final decisions.