Prisoners to their mortgage

September 7, 2015

Many interest only mortgages are fast reaching the end of their term, those mortgage holders who have not made plans as to how the original sum borrowed will be paid off could face repossession at the worst, nearly a million people are in such a situation because they have interest-only mortgages they just cannot pay off, some retirees are being forced to sell-up and move to a smaller home to pay down their debt.

According to the The Citizens Advice Bureau, 934,000 interest only mortgage holders do not have a plan in place to repay in full the mortgage, in fact 432,727 say they haven’t even thought about it. The Financial Conduct Authority has calculated that 300,000 homeowners will struggle to pay back interest-only mortgages over the next five years and around 600,000 interest-only mortgages will reach the end of their term by 2020 and half of those could become mortgage prisoners.

The charity CAB says that in the UK there are 3.3 million mortgage holders who have interest-only products, of these, the survey shows that around 1.7 million have no linked repayment vehicle such as an endowment or ISA.

Citizens Advice chief executive Gillian Guy reportedly 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.”

Interest-only mortgage holders don’t have the same protections when their term ends as other mortgage holders do when they fall into arrears, in 2013 the FCA asked banks to contact all borrowers with interest-only mortgages ending before 2020 about how they plan to repay, only around 30% of borrowers responded

Allen Walkey

Highly experienced businessman with a successful career in property sales and investment both in the UK and abroad. Now a freelance writer and blogger for the property and Investment Industry, keeping readers up-to-date with changes and events in a rapidly changing world.

You May Also Enjoy

Estate Agent Talk

Buy-to-Let Explained: How It Works and Is It Worth It?

Buy-to-let is one of the most popular property investment strategies in the UK, attracting investors who want to generate regular rental income while benefiting from long-term property value growth. Whether you are a first-time landlord or someone considering adding property to an existing investment portfolio, understanding how buy-to-let works is essential. If you are exploring opportunities with Whitegates…
Read More →
Letting Agent Talk

The Hidden Cost of Deposit Disputes for Letting Agents

Nobody gets into lettings because they love arguing over oven grease. Yet for a growing number of letting agents across London and beyond, deposit disputes at the end of a tenancy have become one of the most quietly destructive parts of the job — eating into time, draining morale, and slowly eroding the trust that…
Read More →
Breaking News

Britain’s strongest housing markets revealed

The latest research from Benham and Reeves reveals the best-performing housing markets across Great Britain when it comes to the average rate of house price growth seen over the course of 2025, with the northern regions and Scotland outperforming most of the rest of the country with annual price growth of up to 11%. Last…
Read More →
Rightmove logo
Breaking News

Over £900 million economic opportunity lost to property fall throughs

Analysis from the UK’s largest property platform Rightmove reveals there is an economic opportunity of over £900 million in England if the number of property transactions falling through can be reduced The calculations show that nearly £392m in potential estate agency revenue and £515m in potential government stamp duty receipts were lost last year to…
Read More →
Breaking News

Landlords chasing rental arrears of £470m

The latest research from Propoly – the platform that automates compliance, reduces risk and protects landlords – has revealed that landlords in England deal with more than £470 million worth of rent arrears in a year, with the largest number of tenants in arrears found in London and the North East. Propoly has analysed the…
Read More →
Estate Agent Talk

Building Buyer Trust Through Architectural Visualization in Real Estate Marketing

In real estate marketing, trust is not a soft value. It is a transaction driver. Buyers commit to years of financial exposure based on how credible a project feels long before it is built. That credibility is no longer shaped by brochures alone. Today, developers often work with a rendering agency to construct a visual…
Read More →