Thousands of home owners with interest only mortgages have no pay off plan

Taylor Scott International News

Up to one in 10 home owners aged 55 and over across the UK are still paying interest only mortgages with some unsure of how they will pay off their debt. Research shows that 10% of the 1.4 million owners in this age group still paying a mortgage have an interest only deal, amounting to 143,500 households, according to research from Homewise. It also found that while the majority are confident of clearing the debt some 17%, or 24,300, admit they will be unable to clear the debt. The average amount owed by over 55s with interest only mortgages is around £91,000 with one in seven owing more than £150,000. Homewise, which offers the Home for Life Plan enabling over-60s to buy homes at discounts of up to 59% under a lifetime lease, is urging those with interest only issues to start planning ahead. The Council of Mortgage Lenders estimates that at end of 2015 there are around 1.7 million pure interest only mortgages outstanding with another 500,000 part repayment and part interest only loans. That represents a major success by mortgage lenders and the Financial Conduct Authority which has campaigned since 2012 to help borrowers focus on repaying loans and the number of outstanding interest-only loans has been cut from 3.2 million in three years. Mark Neal, managing director at Homewise, said that the mortgage industry has made massive strides in tackling the interest only issue and has helped borrowers to take action and it is good news from the research that the majority 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. Homewise’s research also 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. Taylor Scott International

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