80% of interest-only borrowers rely on selling up
According to a survey of mortgage advisers carried out by more 2 life, more than a third of advisers said their clients were planning to downsize or sell their home to pay off their loan, while 43% said downsizing was part of a wider repayment plan.
A fifth reported their interest-only clients were relying on investments to pay off the capital owed, 17% said they planned to use endowments and 11% savings.
More 2 life managing director Jon King said:
“We found it quite shocking how many people were relying on downsizing as part of their strategy.
“Moving house is an easy thing to say but it not an easy thing to do. Very often these people have lived in this house for years and the repayment of the mortgage does not always coincide with the time you want to downsize. It is about the emotional issues as much as the financial.”
Mortgage advisers were often the first port of call for borrowers looking for advice on their interest-only loans, he added.
Just under half of advisers felt lenders and regulators were not doing enough to address the looming interest-only crisis, the survey found.
The number of people planning to sell their property to fund their retirement has risen by 4% to reach its highest since 2009, according to separate research by Baring Asset Management published this week.