Research suggests rise in demand for advice on interest only and lifetime mortgages

Estate agents in the UK are regularly asked advice about mortgages but they have noticed a rise recently in demand for potential solutions to interest only loans repayments and lifetime mortgages.

New research from equity release referral service Key Partnership has found that 43% say that the number of customers forced to sell to pay off interest only mortgage debts has increased over the past two years.

The research also found that mortgage debt issues are particularly affecting older customers trying to downsize to less expensive houses to release cash and 73% of would be downsizers paying off home loans.

Overall the survey found that some 58% of estate agents say clients want support on mortgages but just 50% of estate agents believe that they know enough about such issues and 52% would be more likely to suggest equity release as a solution if they had a partnership with an independent expert adviser.

Data from the Council of Mortgage Lenders shows the number of outstanding interest only mortgages has fallen by more than a third since 2012 but what is not evident for maturing loans is how they are actually being repaid. The evidence points to the fact that far too many are having to sell their homes to clear the outstanding debt.

Industry data shows around 10,000 borrowers a year between now and 2020 will come to the end of interest only loans, with either a projected shortfall from their repayment strategy or no strategy at all, and many will see equity release as a solution to their capital repayment deadline.

‘Selling up to pay off an interest only mortgage can make financial sense but it is worrying if older home owners are being forced to sell and are not aware of all their options. Equity release enables people to stay in their home and not have to downsize, or even in extreme cases lose their house. Some lenders are engaging with equity release as a solution and we would urge others to follow,’ said Will Hale, director at Key Partnerships.

‘Estate agents are valued as a source of financial guidance and it is clear that those who can discuss equity release as an alternative to selling will be able to benefit from an additional revenue stream by referring potential clients to a specialist,’ he added.

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Written by: Houseladder