A study has found that 28 per cent of mortgage holders aged 55 and over have an interest-only mortgage, with 40 per cent of this group seeing their deals coming to an end in the next five years.
The research from One Family, carried out by Opinium, also shows that 11 per cent of interest-only mortgage holders aged 55 plus will have to pay off their mortgage or find an alternative arrangement within the next year.
One in five of those surveyed said that recent news around the virus, and its potential impact on their finances and lifestyle, would mean that they are more likely to release equity from their properties.
The savings, investments and lifetime mortgage provider states that more than 60,000 over 55s with an interest-only mortgage are expected to consider equity release within the next five years. The figure is based on 83 respondents of the total 2000 sample surveyed stating that they would look at equity release.
OneFamily head of lending proposition Paul Bridgwater says: “It’s a potential perfect storm for holders of interest-only mortgages to see them coming to term at a time when there’s likely to be pressure on their finances. For example, they may now need the assets that they’d allocated to the repayment of their mortgage to help other family members who are struggling.
“Additionally, their investments could have devalued following the stock market crash or simply not performed as expected. Uncertainty in the housing market may mean that property assets that they were planning to realise could also have dropped in value, so the reality is that mortgagors could need to look to an alternative means of financing to cover the shortfall.
“As ever, financial advice will be crucial in helping this group to find their way through these difficult issues. Equity release is one solution that might help homeowners to overcome these challenges.”
