Nearly one million homeowners across the UK are at risk of having their home repossessed because they are on interest-only mortgage deals and have no repayment plans, Citizens Advice warns.
New study from the organisation reveals that 934,000 people had not made arrangements to pay off the debt on their interest-only mortgages at the end of the mortgage term.
The Institute of Financial Services, the professional body for financial and mortgage advisers, responded by urging borrowers who have no repayment plans to seek independent financial advice as soon as possible.
Phil Hall, special adviser to the Institute, said:
“Since 2012 interest-only mortgages have not been available without a repayment plan being in place. Mortgage advisers have played a vital role in ensuring this is the case and help many thousands of borrowers every year.
“However, it’s important to acknowledge that some borrowers who took out these products many years ago will not have been required to have a repayment plan in place and therefore may not have given repayment the proper level of consideration it so clearly deserves. That’s why all lenders have contacted every borrower with an interest only mortgage due to end before 2020 to enquire as to their plans, remind them about the importance of doing so and offer assistance where necessary.
“Repossession is always a last resort but borrowers should take action as early as possible to avoid reaching that situation. Seeking independent financial advice is a good starting point.”
Gillian Guy, chief executive of Citizens Advice, commented:
“It is good rules around these mortgages have changed, but there are many people who previously took out these products and face losing their home.
“It is also important that people can get independent advice, guidance and support about how they can plan and manage their finances.”
