Recently, in my local estate agents I overheard a conversation between the property negotiator and a woman clearly in her late 60s, early 70s. She was explaining that she was looking for a property to buy for herself with the proceeds of the sale of the marital home following a recent divorce.
From the list of properties for sale, the only ones available with the capital she had were all in areas she felt were unsuitable or were in a less desirable area and this set me thinking, especially as she had already discussed the option of raising a mortgage but had been declined due to lack of retirement income.
We are aware that figures from the Office for National Statistics show that the divorce rate for the over 55s is growing at a faster rate than for any other age group. If this continues, it is suggested that by 2037 almost 10% of the population will be facing a life in retirement on their own. This is in addition to those who will become single through the death of a partner or spouse in later life.
It has also become an increasing problem for those in this age bracket to obtain residential mortgages or other finance. Therefore, for those already in retirement or approaching retirement age, it is becoming increasingly difficult to raise finance to move in later life. This is not helped by the fact that for this age group, historically the main pension income has been paid to the main wage-earner, usually the husband.
One solution could have been for the estate agent or perhaps the in-house mortgage adviser to have referred this case to a specialist in Equity Release in order to raise the funds she required. Currently, for a client aged 70 a typical loan of almost 40% could have been raised, perhaps even more depending on the clients’ state of health. So on a £200,000 property she could have borrowed upwards of £78,000, a sum which may well have enabled her to purchase the property she desired.
So who are the winners and losers in this scenario? Well I couldn’t see any winners but the losers are clearly the property vendors who may have lost out on a sale, the estate agents who could have secured a more lucrative property sale and the woman herself who is now facing the prospect of compromising on her home for the future.