Four in 10 older borrowers have an interest-only mortgage
More than 40% of older borrowers are on interest-only mortgages, according to research by more 2 life.
And the older you are the more likely you are to have this type of mortgage, where you still owe the original amount borrowed at the end of the term.
Two in five mortgage holders over the age of 65 have an interest-only mortgage. Of these four in 10 are aged 65 to 74, while over half are aged 75 or over.
Older homeowners are also increasingly burdened with unsecured debt, according to the research, the growth of which is highest among the over 75 age group.
Average unsecured debt rose from £162 in 2006-08 to £487 in 2012-14, an increase of 201%, while the over-85s saw debt jump 218%, from £36 to £115 over the same period.
Is equity release the answer?
Equity release has been described as a lifetine for older borrowers needing to deal with their interest-only debts.
Dave Harris, managing director of more 2 life, said that demand for “alternative later life lending” has the potential to double the size of the equity release market this year alone.
He said: “These borrowers represent an area of the market that needs advice on what to do as their mortgages near maturity. Advisers will be crucial in identifying if equity release can help their clients.
“The interest-only issue is not going to go away and as our research shows advisers and lenders need to work together in the interests of our customers.”