New research from unbiased.co.uk, the professional advice website, reveals that of the 11.2 million households in the UK with a mortgage, an astonishing one in seven, (1.6 million) are simply paying off the interest each month and not repaying capital or saving anything towards paying off their mortgage debt in the future.
“With incomes squeezed, it’s not surprising that many people are trying to save money by sticking to interest-only mortgages, but this is a potential ticking timebomb,” said Karen Barrett, chief executive at unbiased.co.uk.
She added: “What is really worrying is that almost one-third of this group (32%) are either in or coming up to retirement age, while more than half are between the ages of 35 and 55. Many will be forced to downsize or continue to pay large mortgages well into retirement, when income is tighter than ever. The goal of becoming ‘mortgage free’ is becoming ever more elusive for some.”
In addition, with lenders now clamping down on interest-only mortgages, and slashing loan-to-value requirements to around 50%-60%, many people currently on interest-only deals could easily find that no similar options will be available to them when they come to remortgage in the future.
“To avoid any kind of payment shock when you remortgage and to ensure you have paid a considerable chunk of your mortgage off before you retire, it is vital to see a whole of market mortgage adviser. They will be able to help you get the best mortgage deal possible which matches what you can afford or talk you through the options for a repayment plan ensuring that you are fully prepared financially for your future.
“Consumers looking to find a whole of market mortgage adviser can carry out a free and confidential search at www.unbiased.co.uk.”