Expert discusses getting by as an older homeowner in today's climate
An estimated 19% of homeowners between the ages of 50 and 79 have been significantly impacted by the cost-of-living crisis, and do not know how they are going to cope, according to research from LiveMore.
The data found that a further 59% have been slightly impacted, 19% have noticed increased costs but they say they are OK for now, and just 3% said they are not impacted at all.
How are older homeowners impacted by financial constraints?
Leon Diamond (pictured), chief executive and founder of LiveMore, said the cost-of-living crisis is having a big impact on many older people who are struggling to make ends meet, with some postponing retirement or even returning to work.
“For those homeowners who no longer have a mortgage, that is one less monthly payment to worry about, and they tended to be the people in our survey who were less concerned about their finances,” he said.
What most people are worried about, Diamond said, is being able to pay bills, heat their homes and put food on the table.
Add to that the increase in interest rates, and Diamond said the mortgage becomes even more of a financial burden.
“Only 9% of respondents said they have not made any cutbacks, but those who have are eating out less, cutting back on heating and energy, holidays, savings and helping out their families,” Diamond said.
How can older homeowners become more financially secure?
Taking out finance, including a mortgage, Diamond said, is an option for older people - yet many do not think they are eligible.
“Research we carried out last year found only 4% of people aged between 50 and 90 thought they could apply for a mortgage, and that went down to 2% among the over 80s,” he said.
There is another misconception, Diamond added, which is that older people can only access equity release, but that is not true.
“All of our borrowers are aged between 50 and 90+, and until recently we offered interest-only and repayment mortgages, but have now extended that to lifetime products,” Diamond said.
Many people over 50 are asset rich but cash poor, so Diamond said tapping into the equity in their home can be a way to improve their lives. Pensions and other income, he said, can secure an interest-only mortgage or even a capital and repayment product.
If all else fails, the final option, which may suit some people but not all, Diamond said, is a lifetime mortgage.
“A full affordability assessment will provide a clear picture of a person’s requirements and then mortgage options can be explored,” he said.
How can the housing industry help older homeowners?
Instead of one small part of the mortgage industry catering for the 50 to 90+ age group, Diamond said the rest of the market needs to recognise the huge potential of later life lending.
“With a growing aging population, there is only one way this sector is going and that is upwards,” he added.
If lenders and advisers are not aware of mortgages for older people, Diamond questioned how consumers can be expected to know about them.
“Education is key and the mortgage industry can contribute to improving people’s lives via good advice and a range of suitable financial options,” Diamond said.
How is the cost-of-living crisis impacting older homeowners? Let us know in the comment section below.
