Property wealth to fund divorce costs

Property as a priority asset

For many couples over 50, property wealth is their most significant financial asset. The research indicates that three-fifths (60%) of all people who divorce over 50 will discuss the value of their joint home as they prepare to separate. This is not surprising, given that people over 55 hold the majority of housing wealth in the UK, with property assets totalling more than £3.5 trillion.

The importance of property wealth in divorce proceedings is underscored by the fact that many over 50s will buy their partner out using savings (18%). However, an increasing number of couples are turning to equity release to stay in their homes. One in 20 couples now use equity release as a means to manage their housing situation post-divorce. Homeowners in England and Wales could release an average of £69,600 from their homes using equity release, an increase of 20% in just five years.

The role of financial advisers

Despite the complexity of dividing finances during a divorce, only 8% of couples take financial advice as part of the separation process. This presents a significant opportunity for financial advisers working in the lifetime mortgage market to provide valuable guidance and support to clients navigating this challenging time.

Financial advisers can play a crucial role in helping clients understand their options and make informed decisions about their property wealth. By offering tailored advice on equity release and other financial products, advisers can help clients achieve a fair and sustainable financial settlement.

Equity release as a solution

Equity release can be an attractive option for older couples looking to stay in their homes post-divorce. It allows homeowners to access the equity tied up in their property without having to sell it. This can provide a vital source of funds to cover the costs of divorce and enable one partner to buy out the other.

For financial advisers, it is essential to ensure that clients fully understand the implications of equity release. This includes the impact on inheritance, the potential for reduced means-tested benefits, and the long-term financial commitments involved. Advisers should also explore alternative options with clients, such as downsizing or using other savings and investments, to ensure they make the best decision for their circumstances.

The importance of early advice

Encouraging clients to seek financial advice early in the divorce process can help them navigate the complexities of dividing assets and ensure they make informed decisions. Financial advisers can provide valuable insights into the potential financial outcomes of different settlement options and help clients plan for their future financial security.

By working closely with clients, advisers can help them understand the value of their property wealth and how it can be used to achieve a fair settlement. This can include exploring the benefits and drawbacks of equity release, as well as other financial products and strategies.

Conclusion

Our research highlights the significant role that property wealth plays in the financial planning of couples over 50 facing divorce. With one in 10 couples using property wealth to fund the cost of their separation, there is a clear need for expert financial advice in this area.

Financial advisers working in the lifetime mortgage market have a vital role to play in supporting clients through this challenging time. By providing tailored advice on equity release and other financial products, advisers can help clients achieve a fair and sustainable financial settlement, ensuring their long-term financial security. Encouraging clients to seek advice early in the divorce process can make a significant difference in their financial outcomes and overall well-being.