Citizens Advice recently issued a stark warning to the 934,000 homeowners currently with interest-only mortgages, referring to the problem many will face repaying the capital at the end of the term as ‘a ticking time bomb’.

A spokesperson urged those affected to put in place plans now to ensure they can repay the capital when the time comes.

Many borrowers took on interest-only mortgages before the new stricter rules on mortgage eligibility came into force. They have yet to give proper consideration as to how they will repay the capital amount when it becomes due at the end of the mortgage term. If the money can’t be found, then the homeowner faces having to sell their property to repay the outstanding loan or face repossession.

Lenders are increasingly aware that some people with interest-only mortgages are likely to face difficulties in the future, and are developing products to avoid the risk of borrowers defaulting and the need to sell.


If you have spare cash available, you can make a capital repayment to reduce the amount outstanding. Those with a pension pot can consider using their 25% tax-free lump sum on retirement to pay down the debt. However, it’s important to consider your future needs and it all depends on your individual circumstances.


You could consider switching to a repayment mortgage instead. Whilst it would mean an increase in monthly payments, you would be paying off the capital outstanding.


Selling your home could release enough cash to repay your mortgage. This can be an acceptable solution if the right alternative accommodation can be found.

However, if you’d rather stay in your current home, then Equity Release might be a viable alternative, often involving a lifetime mortgage where you take out a loan secured on your home which doesn’t need to be repaid until you die or go into long-term care.

As life expectancy rises, property wealth is emerging as an accessible source of funding for those aged 55 and over. Whilst downsizing is an option many consider, retirement property is in short supply.

So it’s no surprise that some are turning to equity release to unlock the cash tied up in their homes, with the aim to enjoy a comfortable retirement, pay down other debts, boost their income or plan capital expenditure, all without moving home.

Independent professional advice is essential; equity release isn’t the right solution for everyone. Releasing cash from your home reduces the value of your estate and the amount of inheritance you leave, so you should involve your children and dependants from the outset.

These schemes are expensive and inflexible and are not suitable for everyone.

Risk Warning

Think carefully before securing debts against your home. To understand the features and risk of Equity Release, ask for a personal illustration from a qualified independent financial adviser.

Clifford Osborne is a member of the Equity Release Council, a body established to promote safe equity release products and protect consumers.

We serve clients across East Sussex, including Eastbourne, Uckfield, Lewes, Crowborough, Hastings, Seaford, Newhaven, Brighton, Hove and Tunbridge Wells. Recommendations have led to gaining clients well beyond Sussex too.

As well as mortgage advice and equity release advice, we also offer financial advice on: pensions, investments, estate planning and more.