Homeowners turn to equity release as repayment plan for interest-only mortgage
Approximately 700,000 homeowners with an interest-only mortgage have no investment plan in place to clear the debt.
A report from Mortgage Achilles, BERC Continental’s annual study of the “the mind of the mortgage market” has found 39 per cent of all interest-only mortgage holders have no idea how they will pay off their mortgage at the end of its term.
It estimates there are around 1.8 million homes in the UK on an interest-only mortgage and while 48% of those without a repayment plan still have over 15 years left on their term, there remain many for whom d-day is imminent.
In additional to these figures, there are a further 400,000 homeowners whose investment plan, such as endowment policies, have fallen short of the mark.
While some will consider selling the property or switch to a repayment mortgage, there is a belief that many older homeowners will turn to equity release to offer a solution to this severe financial predicament or help subsidise the deficit.
Richard Espley is the Head of Equity Release at Goldsmith Williams:
“Interest-only mortgages are now widely referred to as the industry’s ‘ticking time bomb’ with many homeowners set to feel the full force of its blast.
“Equity release is as option available to homeowners over the age of 55 looking for a long term mortgage solution as well as for those seeking to supplement an underperforming repayment plan.”
Content correct at time of publication