An interest-only mortgage crisis is widely agreed to be looming, with hundreds of thousands of people having no way to repay their loans when they fall due in the next few years.
And, anyone who hopes to resolve the problem by unlocking their retirement cash when the pension rules change next year is likely to be disappointed.
From 2017 an estimated 40,000 interest-only mortgages held by borrowers aged 65 and over will mature every year, according to Age UK.
However, new research by the charity reveals a huge gap between the amount that people think they will need to repay their mortgage and the amount they actually owe.
Interest-only borrowers believe that their average shortfall will be around £22,000 but the latest estimate by the Financial Conduct Authority shows that nearly half of the people with these mortgages actually owe in the region of £50,000 – at least twice as much.
With the average pension fund currently worth £36,800, a third less than the average interest-only debt figure, those thinking of using their retirement savings to pay off their mortgage will need to rethink the situation.
There are other options for settling the mortgage, such as extending the loan period. It is important to secure unbiased, sound financial advice at the earliest opportunity.
For more information contact Beth at beth@lovemortgages.co.uk