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.