How can Later Life mortgages help you achieve the retirement you imagined?
Research from the Office of National Statistics has shown that life expectancy in the UK has increased over the last 40 years. As such, the State Pension age has also risen, causing a need for those reaching 65 to continue working in order to keep up with the spiralling cost of living.
However, in recent years a combination of insufficient private pensions and the rising State Pension age has seen more people struggle to achieve their dream retirement. Many in their later years are now working longer and considering releasing the equity in their homes to enjoy their dream retirement.
As outlined in the State Pension Age Review 2023 – between 1948 and 2010, the State Pension Age was 60 for women and 65 for men. However, due to life expectancy projections, the government readjusted their results in The Pensions Act 2011, bringing the State Pension age to 66 — the current age for seniors to get their State Pension.
The 2014 Pensions Act later brought the State Pension age up to 67 (for those reaching that age in 2026 and 2028), so there’s every likelihood that the age of retirement could rise even further for those entering their later years after 2028.
As a result of the incrementally increasing pension age and the ongoing cost of living crisis, thinking about later life and retirement is a good practice, even if you are some years away from retiring.
One way to achieve the retirement you imagined while protecting yourself and loved ones in your retirement is through a Later Life mortgage. A Later Life mortgage enables homeowners aged 55 and over to access the value within their property, with a broad range of acceptable uses for the money released.
However, please be aware that if you wish to raise capital to fund care in your home, it is essential that you first explore local authority funding to confirm the support that may be available for your domiciliary care.
What is a Later Life mortgage?
A Later Life mortgage is uniquely designed for those in the later years of their lives. At Henry Dannell, we provide Later Life mortgages for homeowners aged 55 and over.
Later Life mortgages are a way to unlock the value of your home whilst you’re still living there. In addition, they offer a great way of borrowing money in your retirement and don’t involve having to sell your home.
With a Later Life mortgage, you can release equity (value) of your home, allowing you to use the money in a number of ways, be it to repay a mortgage coming to the end of its term, to help support your family, or to complete home improvements. In fact, Later Life mortgages can be used for most objectives, except for investment.
What are the benefits of a Later Life Mortgage?
There are several benefits of taking out a Later Life Mortgage, including the following:
Paying off debts
Research shows that the average debt at retirement is approximately just under £34k per person. Owing a large sum of money in your later years can dramatically impact your net disposable income and the quality of life you’ll enjoy throughout your retirement.
As some of the Later Life mortgages available do not require you to make any payments, they offer flexibility and can help borrowers to manage their committed expenditure.
However, as you will be securing unsecured debt against your property for the duration of the mortgage, the cost is likely to be higher than if you repaid your unsecured debt as soon as possible. It should also be noted that while a mortgage may allow flexible, voluntary payments, any unpaid interest will roll up and increase the final amount to be repaid.
Buying a new home
Releasing the equity in your existing home is a great way to get the funds required to buy a second property for your own use. Equity can also be released on a new home purchase to cover a shortfall in the associated purchase costs (e.g. Stamp Duty, surveys, admin fees etc).
Paying for home improvements
One of the most popular reasons for taking out a Later Life mortgage is to carry out home improvements to enhance your living space. Home improvements can also help raise the value of your home, so it might be an additional benefit if you or your relatives wish to sell the property later.
Helping family members
Another common use of equity release is to help family members cover their living costs or achieve their ambitions in life. For example, you could release some of the equity to help your children or grandchildren to get onto the property ladder.
Taking a dream holiday
Have you always dreamed of taking a round-the-world cruise? Well, releasing equity can help make those dreams a reality.
There are even more reasons and benefits to taking out a Later life mortgage than we have listed above. If you want to learn more, please look at our 20 Things You Need To Know guide on Later Life mortgages.
Regardless of the reasons why you may choose to take out a Later Life mortgage, it’s important to speak to a qualified adviser before proceeding with any mortgage option.
Enrich your Later Life with Henry Dannell
Later Life mortgages are a great way of realising your dreams and helping you achieve your goals in later years, but there are many other considerations.
We understand that equity release is not for everyone. That is why at Henry Dannell, we advise on a wide range of mortgage products. Whether you’re looking for a fixed rate for life or the flexibility of voluntary payments, Henry Dannell is here to help. Please book a consultation with one of our specialists to explore your options and learn more.
Please note: Later Life product options include Retirement Interest Only and Lifetime mortgages. To understand the features and risks, always obtain a personalised illustration.