Interest-only mortgage time-bomb for over 55s
One in 10 homeowners across the UK aged 55+, the equivalent of 143,500 households, are still paying off their interest-only mortgage, research from Homewise reveals.
While the majority are confident in clearing the debt, a substantial number fear they won’t be able to.
The study found that 17% of interest-only borrowers aged 55+ will struggle to clear the debt which stands at an average £91,000.
One in seven owe more than £150,000.
Statistics from the Council of Mortgage Lenders estimate there are around 1.7 million pure interest-only mortgages outstanding with another 500,000 part repayment and part interest-only.
Homewise’s research shows 34% of over-55s plan to clear their interest-only mortgage with cash from savings and investments while 10% aim to use pension cash to clear the debt. Another 11% are banking on an inheritance.
Mark Neal, managing director at Homewise, said: “The mortgage industry has made massive strides in tackling the interest-only issue and has helped borrowers to take action.
“The good news from our research is that the majority of over-55s who have interest-only loans have plans in place to ensure they can pay off the capital but there are still substantial numbers who do not appear to know what they will do.
“They have a range of options including selling their home and downsizing but that may not be suitable for all.”
For more see YourMoney.com’s: Five options if you can’t repay your interest-only mortgage guide.