Currently 934,000 have no plan to pay it off at the end of their term out of 3.3 million interest-only mortgage holders.
Some are not even aware that they need to repay the capital when the term ends, a sum which typically stands at £71,000.
Banks and building societies have been told by the Financial Conduct Authority to write to endangered customers to warn them that they could be in financial danger.
Gillian Guy, chief executive of Citizens Advice, said: “People buy a home for stability – but interest-only mortgages have forced many into a financial black hole.
“It is good rules around these mortgages have changed, but there are many people who previously took out these products and face losing their home.
“Lenders have to exhaust all other options when borrowers get into arrears – it’s time to level the playing field so that interest-only customers get the same protections when their mortgages mature.”
Borrowers at risk are advised to contact their lenders to find a solution, such as extending the mortgage term.
The CML said: "Lenders will continue to communicate directly with customers in a variety of ways and to raise consumer awareness.
“Borrowers should not ignore attempts to communicate with them. The lender is trying to help and reduce the risk of shocks at the end of the mortgage term."
An FCA spokesman said: “We expect firms dealing with interest-only borrowers to discuss repayment strategies and propose solutions where there are no plans in place. While we have seen many firms progress with this, borrowers must also engage with their lenders now to resolve it, we will also continue to monitor lenders as part of our normal supervisory work.”
Simon Chalk, equity release expert at Age Partnership, said over-55 borrowers have the option to pay off the capital using a lifetime mortgage.
He added: “It’s fundamental to get the message out to retirees concerned about paying back an interest-only loan that equity release could work for them.
“Fixed interest rates are at record lows and plans offer greater choice and flexibility than ever before.
“Some modern plans include voluntary repayment options, meaning borrowers may choose to make capital repayments, to reduce the overall size of their loan, without worrying about the lender demanding proof of their income.
“Importantly, unlike with a normal mortgage age isn’t a problem with an equity release plan. In fact, it’s the exact opposite; the older the borrower, the more money they can release. These modern plans on offer can provide a vital solution for interest-only mortgage prisoners.”
