For those of us who have not yet reached it, when we look ahead to being in our 60s and beyond, and coming up to retirement age, the chances are that we envision ourselves in a fairly healthy financial position with a mortgage either entirely paid off or with a negligible balance remaining.
Given that the average age of first-time buyers in the UK currently sits around the mid-30s and most mortgage terms are scheduled to run for 25 or 30 years, this is not an entirely unfair assumption to make. However, as anyone who works in the financial services industry knows, things don’t always work out according to plan and some worrying statistics have emerged about the percentage of older homeowners finding themselves in real repayment difficulty.
According to the Consumer Credit Counselling Service (CCCS), the number of enquiries from concerned homeowners over the age of 60 soared by 44% between 2009 and 2011, with many callers fearing eviction. The uncertain economic climate of the past few years has obviously affected those in all age brackets, but when you consider that the increase in enquiries to the CCCS from homeowners younger than 60 was just 3% over the same period, it proves how much harder some of the older generation are being hit in the pocket.
With the vast majority of such homeowners surviving on a fixed income such as a pension, they are unable to absorb the continued increases in the costs of living in the same way that those who are still part of the workforce can. Others have been let down by endowment policies failing to perform which has left them with a shortfall they were not prepared for.
Perhaps most worryingly of all is that it is not just those that have recently retired that are still plagued by money troubles, with one enquiry to the CCCS coming from a 92-year old widower and other calls being fielded from homeowners in their 70s and 80s. It may offer some reassurance to such individuals that a service such as the CCCS can provide advice, but many homeowners may be unaware it exists and this is one of the many reasons why financial education and support for older people is so important.
Without this information to hand – and bearing in mind it may well have been some time since they used any financial service or advice – it is not beyond the realm of possibility that vast swathes of mature homeowners may not even be aware of the range of options and services available to them, such as equity release.
To the uninitiated it may seem somewhat counter-productive to release equity from a property when the full home loan amount has not yet been paid back, but it is just one of a range of possibilities to consider, particularly if the threat of eviction exists. Many older homeowners value their independence and don’t wish to move into a care home or sheltered accommodation, so anything that can help them remain in a property they may have spent the majority of their life in is worth considering.
Statisticians constantly remind us that we have an ageing population, so if nothing is done to address the very real problem of older homeowners in financial difficulty, then the problem is only likely to get worse.
Increasing consumer awareness is just one of the objectives of the Equity Release Council so hopefully its work – along with that of its members and putting increased pressure on the government to sit up and take notice – will help more mature homeowners in financial strife to find a satisfactory solution to their troubles.
Chris Prior is business development manager at Bridgewater Equity Release
