Almost four out of five homeowners (78%) between the ages of 50 and 80 are feeling the effects of the cost-of-living crisis, according to research from LiveMore.
Of those, 19% said they were significantly impacted and did not know how they were going to cope.
One of the options for brokers who have clients with mounting debts is an interest-only mortgage for the purpose of debt consolidation.
The Government recently introduced the Mortgage Charter to assist borrowers who are struggling financially, and one of the solutions for those with a repayment mortgage was to move to interest-only.
LiveMore recently published a white paper, ‘Is consolidating debt with an interest only mortgage a good idea?’, which discussed this is more detail, with a focus on clients aged 50 to 90-plus.
Leon Diamond (pictured), CEO and founder of LiveMore, said: “Interest-only loans had bad press in the past but today they are very different, much more straightforward and highly regulated.
“They are also flexible so the borrower could switch later to all or part repayment and can make overpayments of up to 10% a year.”
He added: “As part of Consumer Duty, lenders and brokers must ensure they understand individual circumstances before granting interest-only for debt consolidation.
“Has the client gone through professional debt counselling and considered other solutions, for example?
“We need to understand how the debt occurred in the first place, make sure the borrower is not living beyond their means and can afford to make monthly repayments for the term of the mortgage.
“My message to intermediaries is don’t dismiss interest-only as a debt consolidation solution. The rates are cheaper than credit cards and personal loans and it may well be the best solution for some clients.”
