more 2 life carried out a nationwide study among mortgage advisers and found that 45% believe equity release plans enabling homeowners to continue paying interest on mortgages are a viable solution for customers with looming capital repayment deadlines.
However 63% of advisers say more innovation is needed from mortgage lenders to address the interest-only issue.
FCA figures show 1.3 million interest-only customers face potential shortfalls on their mortgages with homeowners aged 55-plus the most at risk.
Customer data from more 2 life demonstrates more than 80% of customers taking out its Interest Choice Plan are using it to clear mortgage debts and releasing £43,570 on average.
Jon King, managing Director of more 2 life, said: “Advisers have a crucial role to play in helping clients find solutions to looming capital repayment deadlines on interest-only mortgages.
“It is encouraging that advisers are seeing value in the role of equity release plans in addressing the issue as equity release providers have been at the forefront of the drive to find solutions to the interest-only problem.
“But there remains a need for increased innovation and choice for customers who in general are happy to continue paying interest but also require flexibility from lenders in order to stay in their homes.”
However there are criticisms of equity release products from advisers with 25% claiming rates are still too high despite recent reductions and 22% believing that the sector’s reputation remains a barrier for some customers.
Nearly 10% of advisers say the loan to values on offer from equity release plans are not high enough to cover the capital shortfalls faced by clients while 13% believe customers will be put off by the threat to being able to leave an inheritance.
