Women are taking on bigger equity release loans because they were made to wait six years for their pensions.
Exclusive figures for Money Mail show women are now taking on more of the home loan debt than men.
Experts say this could be down to the huge financial burden placed on women born in the Fifties who now have to wait until they are 66 before they can collect their state pension.
‘I’ve blown my kids’ inheritance’: Purita Somerville was forced to take £37,000 out of her £160,000 home
The pension delay is thought to have cost the affected women up to £50,000 each — forcing them to eat into their savings or try to find work.
Equity release allows those aged 55 and over to take cash loans out of the value of their homes. The loans do not have to be paid off until the borrower dies or goes into care.
But they come with compound interest rates that can see your debt double in as little as ten years — potentially wiping out the value of your home and your family’s inheritance.
Figures from equity release firm Age Partnership show women have taken out 13 per cent more in equity than men so far this year. Six years ago, men took out 9 per cent more than women. But in 2014, women took out 7 per cent more, and 4 per cent more in 2015. The statistics show that in 2016 women took out 11 per cent more equity, while in 2017 it was 15 per cent more and then 12 per cent more last year.
The findings come as women this month lost a High Court battle over the Government’s move to switch their state pension age from 60 to 66. Campaigners argued they were not given enough notice to adjust to having to work longer and are now struggling to get by as a result.
Purita Somerville was last year forced to take £37,000 out of her £160,000 two-bed end-of-terrace home in South Wales.
The equity release loan comes with a 3.8 per cent compound interest rate.
Purita, 63, was expecting to retire with a full state pension in 2016, but received a letter from the government in 2013 to say she could not collect her pension until 2022. She says: ‘I have had to take equity release to subsidise my income. That means I have blown my kids’ inheritance now. All I had left was in my little house.
‘When I die there will be practically nothing left. It seems harsh on my kids.’
Purita, who is a member of the Waspi (Women Against State Pension Inequality) campaign group, has worked ever since she turned 17, taking time off only to have children.
She was a carpenter, insurance salesman, video photographer, and fitness instructor. She spent 14 years working at a computer science firm, where she rose to become a manager.
She now works as a customer assistant at Marks & Spencer, earning around £15,000 a year. The divorcee, who has two daughters and five grandchildren, says: ‘It is not a nice situation to be in at this time in life. I have worked hard all of my life and I have never been a burden on the state.
‘The Government has committed one of the worst crimes. It is worse than the Great Train Robbery. They have hurt so many people and they have done more damage.’
Purita, who divorced 20 years ago, survives on her income and a private pension that will pay £157-a-month until she’s 65.
Demand for equity release has hit a record high — with £911 million withdrawn in the second three months of 2019.
Last year more than 80,000 homeowners unlocked £3.94 billion of property wealth.
Age Partnership says women currently take around 4 per cent more equity release loans than men.
The firms’ statistics show that 43 per cent of women were taking on the loans for home improvement work — compared to 24 per cent a decade ago.
Former pensions minister Baroness Ros Altmann says: ‘Women taking out bigger equity release debt is certainly worrying, especially as they live longer than men.
‘The interest on their loans will potentially compound for many more years, eating up more of the value of their homes before they pass away.’
A Waspi spokesperson says: ‘The changes to the State Pension age have forced many Fifties-born women to turn to desperate measures in order to support themselves financially.
‘The high interest rates on such loans further penalise these women, forcing them into greater financial hardship but many are left with little choice.’
State pension age for women has been gradually increased from 60 since 2011 and levelled with men at 65 last November.
By 2020, the qualifying age for both sexes will be 66.
Andrew Morris, equity release advisor at Age Partnership, says: ‘These changes have left many with a gap in their financial planning needs. Our analysis has shown that females have released more money than males. This highlights how property wealth can help ease the pension savings gap.’
- Money Mail has produced a guide to equity release. For a free copy, call 0800 470 1051 or visit mailfinance.co.uk/release
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