Funding a Divorce Settlement Over 55s

Settlement funding mortgages typically follow the same product categories as other later life mortgage applications. A standard residential remortgage on the home you are keeping can release capital equal to the settlement amount, assuming your age and income support it. A retirement interest only (RIO) mortgage is an alternative where pension income supports the monthly interest payments. A lifetime mortgage may be appropriate where the settlement amount is large relative to your income or where you prefer not to have monthly payments.

Timing is often critical. A court order or consent order commonly sets a specific date by which the settlement payment must be made, often within a few months of the order being finalised. Mortgage timelines need to fit within this window, which means starting the mortgage application promptly and coordinating closely with your solicitor. Where the timeline is very tight, a bridging loan may be used as a short-term funding route, with a longer-term mortgage arranged to take over.

Affordability assessment post-divorce can be complex. Your income has usually changed (either because a joint working income is now single, or because pension sharing has redistributed retirement income). Your outgoings may have changed too. Some lenders will accept the post-divorce position directly based on the consent order; others will want to see the post-divorce income pattern established for several months before accepting the application.

Pension sharing orders are a specific feature of many later-life divorces. A pension sharing order transfers a percentage of one party’s pension to the other, which becomes a separate pension in the receiving party’s name. The pension sharing order itself does not directly affect mortgage eligibility, but the resulting change in pension income on both sides affects affordability calculations.

The family law elements of the divorce (the settlement itself, the consent order, any pension sharing arrangement) belong with your family law solicitor. Our role is the mortgage, which typically sits alongside rather than within the legal process. We will need information from your solicitor (typically the draft or final consent order) to match the mortgage to the settlement requirements.

The Process

Your first conversation is a relaxed discussion about the settlement, the timescale, and your wider circumstances. There is no cost or obligation.

We complete a full fact-find and coordinate with your family law solicitor. We research the market and come back with a written recommendation. Timing is usually important on these cases and we work to realistic milestones.

Every settlement case is different. A clean break settlement with a defined capital sum is a different conversation from a complex settlement involving pension sharing, property transfers, and multiple assets, and our advice reflects those differences.