People living longer than ever before
Changing attitudes towards relationships and separation
Greater financial independence
Fewer childcare responsibilities
However, divorcing later in life often presents different financial realities. Many individuals:
Have substantial equity in their homes
Are approaching or already in retirement
Rely on pensions rather than employment income
This makes dividing assets—particularly property—more complicated.
The Main Issue: How to Split the Family Home
For most couples, the family home represents their biggest financial asset. When divorce occurs, there are generally three routes:
Selling the property and dividing the proceeds
One partner remaining and buying out the other
Continuing joint ownership (which is rarely ideal long-term)
The challenge comes when one person wants to stay but doesn’t have enough available cash to pay the other their share. This is where equity release can offer a solution.
Understanding Equity Release
Equity release allows homeowners aged 55 and above to unlock some of the value in their property without having to move.
The most widely used option is a lifetime mortgage, which allows you to:
Borrow against your home’s value
Keep full ownership of the property
Delay repayment until the property is sold, typically after death or moving into care
Why More Divorcing Couples Are Using Equity Release
Staying in the Home
For many people, remaining in the family home provides a sense of stability during what can be an emotionally difficult time. It allows them to:
Maintain their routine
Stay connected to their local community
Avoid the stress of relocating
Equity release makes this possible while still ensuring a fair settlement.
This can simplify the process and avoid the costs and disruption associated with selling.
No Need for Traditional Mortgage Approval
Older borrowers often struggle to secure a standard mortgage due to income limitations or retirement status. Equity release products typically do not rely on affordability in the same way, making them a more accessible option.
Protecting Other Financial Assets
Using equity release means couples may not need to draw from pensions or savings. This can help preserve long-term financial security and avoid unnecessary financial strain later on.
Flexible Settlement Options
Equity release can be adapted to suit individual circumstances. Whether a couple needs a specific lump sum or prefers a more gradual release of funds, there are options available to support different settlement arrangements.
An Example Scenario
Consider a couple in their late 60s with a property worth £500,000 and no outstanding mortgage.
If one partner wishes to remain in the home, they could use equity release to access part of the property’s value—perhaps £150,000 to £200,000—and use this to provide a financial settlement to the other partner.
This avoids the need to sell the home while still achieving a fair division of assets.
Key Points to Think About
Although equity release can be highly effective, it’s important to understand the implications.
Impact on Inheritance
The total loan and accrued interest will reduce the value of the estate over time.
Interest Accumulation
Interest is typically added to the loan, meaning the amount owed increases over the years.
Early Repayment Charges
If you decide to repay the loan early, there may be penalties depending on the plan.
Professional Advice Is Essential
Both legal and financial advice are crucial to ensure the arrangement is suitable and sustainable.
Why Expert Guidance Matters
Using equity release during a divorce involves more than just choosing a financial product. It often requires coordination between solicitors, advisers, and sometimes pension specialists.
At My Later Life, we specialise in helping clients navigate these more complex situations by:
Reviewing all available options
Providing tailored recommendations
Offering clear and straightforward advice
Is It the Right Approach for You?
Equity release could be a suitable option if:
You want to remain in your current home
You need to provide a financial settlement to a former partner
Traditional borrowing isn’t an option
You understand the long-term financial impact
It’s important to look at the bigger picture and ensure any decision fits within your overall financial plans.
“We’re seeing a clear rise in clients using equity release as part of a divorce settlement. For many over-55s, the family home holds the majority of their wealth, and equity release provides a practical way to divide that fairly without forcing a sale. It’s about giving people options at a time when they need flexibility the most.”
Graham Clelland, Director, My Later Life
Final Thoughts
As divorce later in life becomes more common, the need for flexible financial solutions continues to grow. Equity release is increasingly being used to help couples separate their finances in a fair and practical way, without forcing major lifestyle changes.
If you’re going through a divorce and exploring your options, getting the right advice early on can help you make informed and confident decisions.
Speak to My Later Life
At My Later Life, we’re here to help you understand your options and guide you through the process with clarity and care.
