The biggest obstacle to late life borrowing isn’t affordability, it’s shame – Mortgage Strategy
The Financial Conduct Authority recently warned that too many consumers are considering late life loans when they are under financial pressure. At the same time, we are seeing another important change in the housing market – the growing number of first-time buyers aged 50 and over.
At first glance, these appear to be two unrelated approaches. One concerns aspiring home owners, some older home owners unlocking wealth. But they have something important in common, they are both influenced by an emotion we rarely discuss in financial services – shame.
For many people, financial decisions aren’t just about affordability or product suitability, they’re really about ownership. Buying your first home at age 55 can feel like you’re admitting you’ve somehow followed your peers. And a homeowner now considering an equity release may feel like admitting that your retirement didn’t go your way. Even claiming Pension Credits or other benefits to which they are fully entitled can be considered a personal failure.
The FCA’s comments suggest that advisers need to think beyond individual products and consider the wider consumer journey. I would say that the journey often begins long before someone walks through the counselor’s door. It starts with overcoming the emotional barriers that prevent people from asking for help in the first place.
Many clients in later life grow up believing that money should always be a private matter. Discussing debt, financial difficulties or dependence on family is not done. That generational mentality explains why many elderly people continue to struggle in silence, why scam victims often hide large financial losses and why discussions about accessing housing wealth are delayed until the situation becomes dire.
When many clients inquire about late life loans, they are not just looking for a financial solution. They often seek reassurance that they have not failed.
That gives an opportunity to advisers. Asking, “Have you considered equity issuance?” it can inadvertently reinforce the idea that the client has reached a final agreement. We’ve found that doing a conversation differently is more powerful.
For example: “Many clients in their 60s are now using asset wealth linked to pensions because people tend to live longer and as a result, retirement looks very different from twenty years ago.” This puts home equity as part of retirement planning rather than an emergency measure.
The same principle applies to conversations with older first-time buyers. Rather than focusing on why home ownership has happened later than expected, advisors can see the reality of today’s housing market. Divorce, recent relationships, career changes, care responsibilities and decades of challenging insolvency means there is no longer one ‘normal’ route to home ownership.
Removing judgment from these conversations allows clients to focus on solutions instead of perceived failures. Counselors must also think beyond the individual client. Increasingly, financial planning in later life becomes a family discussion.
Older children may be the first to notice that their parents are struggling financially. They may experience deferred household maintenance, reluctance to spend money or silent sacrifices to provide for children and grandchildren. However, these conversations are known to be very difficult to initiate. Older parents may interpret giving as a threat to their independence, while older children worry about being seen as motivated by legacy rather than concern.
With the client’s consent, the counselors are placed in a separate role as neutral facilitators. Inviting trusted family members to relevant discussions can reduce misunderstandings, promote transparency and help families make informed decisions together. Importantly, it also emphasizes that late life borrowing is not just a product purchase but part of a broader financial planning discussion.
As our population ages and housing wealth increasingly becomes part of retirement planning, technology alone may not be enough. The advisors who make the biggest difference will be those who understand the emotions behind financial decisions.
We often see the biggest barrier to better outcomes in later life not being able to pay regularly – it’s the fear of asking for help.
Malcolm Davidson, managing director of UK Moneyman
