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Divorce is declining within younger age groups, but ONS figures show it is a growing trend among the over 60s.
For some, divorce can represent a new start. However, for many others it will be an emotional transition that can have a negative effect on the couple's finances.
In over half of divorce cases, 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 isn’t always the best option. As well as the emotional and financial difficulties of moving, clients are faced with fierce competition from first time buyers. Sought-after smaller homes can become less affordable as competition is steep.
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.
Read our case study on using a lifetime mortgage to support a later life divorce.
A lifetime mortgage can provide additional income at an expensive time. Your client 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.
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.
Only 3% of people seek financial advice when going through a divorce process, but advisers can play an essential role in helping a couple find financial fairness.
Good advice early on in the divorce proceedings can make a real difference to your clients. There are many situations where a lifetime mortgage could be a viable solution and help avoid some of the financial and emotional stress of a divorce.
It’s important to remember that a lifetime mortgage creates a debt on the home, and if your client has more affordable ways of borrowing available, these should be considered first.
Interest is charged on the total loan amount plus any interest already added and the amount owed grows quickly and reduces the equity left in the property.
A lifetime mortgage will reduce any inheritance and may affect entitlement to State Benefits.
Find out more about our Lifetime Mortgages, and how they could help your clients through a later life divorce.
It’s often women who feel the financial burden from a later life divorce. How can advisers help women find financial fairness?
We talked to pensions and divorce expert Debora Price, Professor of Social Gerontology. She’ll help us explore why pensions can be so challenging when people are divorcing and how you can help them make better decisions.
We’ve highlighted the key facts and figures around divorce to support your conversations with clients and professional connections.
This website is designed to give professional financial advisers information and tools that they can use to help control and develop their business and should not be relied upon by private investors or any other persons.