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Huge numbers of pensioners face losing their home because they have an interest-only mortgage with no linked investment to clear the debt.

One in three over-70s who still owe money on a mortgage have an interest-only deal with no linked investment to pay off the debt, according to new research from the International Longevity Centre-UK and the University of Bristol.

And 13% are struggling to make repayments on their home loan.

One in five people over 50 also have large outstanding mortgages, owing an average £62,200, and could be heading into trouble further down the line.

But the problem gets more acute as people get older. Nearly one-quarter of mortgaged households headed by someone over 75 owe 25% or more of the value of their home and 5% owe more than 50%.

While 40% of the oldest mortgaged households have at least one interest-only deal without a linked investment, that figure falls to just 6% among the under-55s.

At least 14% of older mortgaged households had taken a new mortgage on or extended their loan within the last two years.

Andrea Finney of the Personal Finance Research Centre at University of Bristol said: “Home ownership is common among the over 50s, but these new findings highlight a core of households whose mortgages have persisted into older age.

"It is surprising to see such high loan-to-value ratios among mortgaged households headed by someone in their late 60s for example. Other assets only go part way to explaining this, raising important questions about the financial security of these households as they approach later life.”

David Sinclair, assistant director of policy and communications at ILC-UK, added: “This research reveals that owing money on your home is not the preserve of the young. We are seeing a worrying picture emerge of older people with unlinked interest-only mortgages.

"As the FCA and industry communicates with people with unlinked interest only mortgages, it should evaluate whether any specific targeting of information and advice is necessary for older people with unlinked mortgages.”

The Financial Conduct Authority said in May that it would work with the Council of Mortgage Lenders and the Building Societies Association to ensure lenders contact their borrowers in order to prompt them into checking customer plans for repayment is on track and explaining their options. 

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