Only 23% of interest-only mortgage holders are regularly putting money away in order to pay off the capital, according to a study by insurer MarketGuard.
This drops to 18% in the North but rises to 26% in the South.
18% don’t know or are not thinking about how they will pay off their mortgage capital. 12% believe property prices will rise, enabling them to pay off the mortgage in full
Chris Taylor. CEO of MarketGuard, said: “Whilst interest-only mortgages undoubtedly helped people move onto the housing ladder, sadly for many, the chickens are coming home to roost. As our report shows, three in four borrowers with interest only mortgages do not have any firm plans on how to pay off their mortgage and many may not be able to afford to.
“Negative equity coupled with high LTV and the cost of remortgaging is adding to the number of ‘mortgage prisoners’, those feeling trapped and uncertain of their future repayments. Gaining security and control over your monthly outgoings should be at the top of everyone’s priority list and we recommend that everyone should lock their rate now before it’s too late.”
Opinium Research carried out an online poll of 2,012 interviews between 17-19 April 2012 of which 130 have an interest only mortgage. Results have been weighted to nationally representative criteria, it said.