For those borrowers over 55 years of age with an interest-only mortgage, one option that could be considered is equity release but it’s important to get specialist advice.
Commenting on interest-only mortgages, Dean Mirfin of Key Retirement Solutions, said: “Those most at risk are the over-55s as this is very much a retirement income crisis.
“But there is time to address the crisis and there are solutions already available ranging from downsizing your home to considering switching to an equity release lifetime mortgage which enables them either to continue paying interest or have interest roll up while escaping the looming repayment date.”
Nigel Waterson, chairman of the Equity Release Council, commented: “The reality remains that a number of people still face a decision about how to clear their outstanding balance, which can be challenging in later life when many people find their finances are already overstretched.
“There are a number of equity release products available to homeowners long past the age of 55 – unlike many sources of borrowing which dry up in later life. Some of these products also allow people the flexibility to make monthly interest payments, rather than allowing it to accrue over time, which ultimately helps to protect the wealth tied up in their home.
“In any case, it is wise to research these options and speak to a professional advisor in order to decide on the best possible option for the individual situation.”
Claire Barker, chairman of the Equity Release Solicitors Alliance (ERSA) agrees. She said: “For those looking into equity release, it is vital they seek specialist advice to understand the full implications of any product they take out.
“Rightly, it has been pointed out that mis-selling is not the cause of the problems with interest only mortgages. That said, there does appear to be a portion of people who didn’t fully appreciate the implications of the agreement they were taking on, which indicates a failure in the advice given which I’d expect using a specialist would have avoided.
When taking out financial products of the magnitude of a mortgage or equity release product, specialist advisers and expert lawyers are fully equipped to ensure all parties understand the agreement and should be the first port of call.”
