Interest-only prisoners turn to equity release
Equity release firm Age Partnership said more borrowers were finding themselves trapped since the introduction of the Mortgage Market Review last April.
These borrowers are unable to switch between mortgage deals because they do not meet lenders’ increased requirements.
Some 300,000 interest-only borrowers have mortgages which expire by 2020, but have no means of paying them off.
Almost 2,500 older borrowers have used equity release to pay off interest-only mortgages since the new rules were introduced.
Simon Chalk, equity release expert at Age Partnership, said: “The interest-only time-bomb has been made all the more devastating by the affordability criteria introduced by lenders as a consequence of the Mortgage Market Review.
“Fewer older homeowners have the opportunity to remortgage to set up a new strategy to clear their debt. That leaves swathes of homeowners with no obvious way to clear their interest only debt whilst still remaining in their home.
“In the worst cases, retirees are being forced to sell-up and move to a smaller home to pay down their debt – a stressful and emotionally turbulent outcome which often causes unnecessary upset in later life. This is an urgent situation: those borrowers with interest-only deals should not be forced to abandon their life-long homes.”