The Citizens Advice Bureau (CAB) commissioned research through YouGov and discovered that around a million people do not have any way of paying off their interest-only mortgages. Although there has been a major drop in the number of interest-only mortgages sold as a result of tightening of rules in 2012, CAB estimates out of the 3.3 million who have interest-only products:

  • 1.7 million have no linked repayment method.
  • 934,000 have no plan for repayment.
  • 432,727 have not thought about the capital repayment. 

A protocol was introduced three years ago requiring lenders to consider alternative options when mortgage holders falls into arrears before starting any possession action, but these do not apply to interest-only mortgages. CAB has therefore called for lenders to consider the following steps before taking a borrower with an interest-only mortgage to court: 

  • Discuss a range of repayment options.
  • Discuss moving to an alternative mortgage product, including extending the duration of the mortgage.
  • Give enough time to borrowers to sell their home for market price if necessary.