More than a million and a half UK homeowners could be facing an interest only crisis.
New figures have revealed that of the 11.2 million households in the UK with a mortgage, a sizeable one in seven – the equivalent of 1.6 million homes – are simply paying off the interest on their home loans each month.
The scenario of well over 1.5 million homes only paying interest each month and not repaying capital or putting anything towards their overall mortgage debt has been described as a 'ticking timebomb'.
Even more worrying is that almost a third of this group (32%) are either in or coming up to retirement age (55+) while more than half are between the ages of 35 and 55 (53%).
"Many will be forced to downsize or continue to pay large mortgages well into retirement, when income is tighter than ever," said Karen Barrett, chief executive at unbiased.co.uk.
"The goal of becoming 'mortgage free' is becoming ever more elusive for some."
In addition, with lenders now clamping down on interest only mortgages, and slashing loan-to-value requirements to around 50% - 60%, many people currently on interest only deals could easily find that no similar options will be available to them when they come to remortgage in the future.
In recent weeks Santander, Halifax and Nationwide have been amongst the providers to change their interest only deals.
It means that hundreds of thousands of people could well struggle to boost their payments when their interest only period comes to an end.
On some mortgage deals, when homeowners revert back to repaying capital they also have to make up the funds lost during their interest only period.
It means that their new payments could become unaffordable, leaving them in danger of having their homes repossessed.
"With incomes squeezed, it's not surprising that many people are trying to save money by sticking to interest only mortgages, but this is a potential ticking time bomb," said Ms Barrett.
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