Nearly one in five mortgage holders admitted they did not understand their loan, while almost a quarter did not know what interest rate they pay.
A quarter (27%) of all interest-only mortgage holders may not be able to pay back their loans, according to a survey undertaken by the Centre for Economics and Business Research for mutual OneFamily.
The study suggested interest-only mortgage holders face increased financial uncertainty, with the expected average unsettled debt estimated to be £21,000.
Nearly one in five (18%) mortgage holders admitted they did not understand their loan, while almost a quarter (23%) did not know what interest rate they pay, according to the research. A significant one in 10 interest-only mortgage holders said they had no plan in place to pay off their mortgage, and no idea how they would do so when the debt is due.
Simon Markey, chief executive of OneFamily, said: “Our research adds to a disturbing picture facing thousands of homeowners who do not yet know how they are going to meet their mortgage obligations. With many just not sure what to do, it’s vital they seek advice on all the options including new Lifetime Mortgages which can help them pay off their interest-only mortgage, release capital for other adventures, and stay in the home they love.
“For homeowners in or approaching retirement, lifetime mortgages offer a real alternative. They give families more choice and greater flexibility in how they manage their finances. They are also a great solution for people facing a repayment shortfall at the end of their interest-only mortgage and a means of unlocking capital while staying in the family home.”
