“My bank said I had to quadruple my mortgage payment or sell my house”

Those who have suddenly struggled to fill the gap have turned to declassifying stocks. In the first three months of this year, 42 percent of equity release clients used the money to pay off a mortgage, according to Key Later Life Finance, a financial planner. This accounted for more than half of all equity release loans –– a jump of 45 percent over the same period in 2021 and the highest proportion on record.

Others turned to specialized lenders who offer interest-only annuity mortgages. Mr Higginson and the Atkins have rescheduled through LiveMore, which began trading in October 2020. Their cost is higher than their previous deals (Mr Higginson is now paying £500) but cheaper than hiring.

Leon Diamond of the specialist lender said: “We will likely see a steep increase in the number of mortgage prisoners. These are customers who are on large adjustable rate mortgages but don’t have a repayment strategy.”

Homeowners with interest-only mortgages typically pay a standard variable interest rate, meaning they are at particular risk if interest rates rise. “In the next six to 12 months, defaults and defaults will hit the market,” added Mr. Diamond.

L&C Mortgage Brokers’ David Hollingworth said borrowers are being pressured exactly how they should make repayments.

A large number of older homeowners did interest-only deals prior to 2008, before post-crash regulations brought stricter affordability tests and requirements for clear repayment schedules, he said.

The growth in home prices in the early 2000s meant buyers were encouraged to keep their mortgage costs down. “These borrowers face a real crisis later in life,” he added.

Alex Edmans of Saga Personal Finance, which caters to the over-50s, said: “A lot of people sleepwalk in there and then get a rude awakening.”

A spokesman for Lloyds Banking Group said: “We are in contact with our rate-linked customers throughout the life of their mortgage to remind them of the importance of having an appropriate repayment tool and to get in touch with them if there are any concerns. We have a team of colleagues dedicated to finding solutions for anyone who needs extra help.”

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