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  • Two out of five estate agents report a rise in ‘forced’ interest-only sales
  • More than half of estate agents would highlight equity release as a solution if they had a stronger business partnership with advisers 

Estate agents are increasingly helping customers who have been forced to sell their homes to pay off interest-only mortgages ahead of looming repayment deadlines, independent research* from equity release referral service Key Partnerships shows.

More than two out of five estate agents (43%) say the number of customers forced to sell to pay off interest-only mortgage debts has increased over the past two years.

Mortgage debt issues are particularly affecting older customers trying to downsize to less expensive houses to release cash. Key’s research found nearly three out of four (73%) would-be downsizers are paying off mortgages.

Estate agents are regularly asked for advice and guidance on mortgages and remortgages by clients – nearly six out of 10 (58%) say clients want support on mortgages.

But the survey found growing demand for potential solutions to interest-only mortgage repayment issues, such as lifetime mortgages, with just 50% of estate agents believing they know enough about the plans. More than half (52%) say they would be more likely to suggest equity release as a solution if they had a partnership with an independent expert adviser.

Council of Mortgage Lenders data** shows the number of outstanding interest-only mortgages has fallen by more than a third since 2012 – but what is not evident for maturing loans is how they are actually being repaid. The evidence points to the fact that far too many are having to sell their homes to clear the outstanding debt.

Industry data shows around 10,000 borrowers a year between now and 2020 will come to the end of interest-only loans, with either a projected shortfall from their repayment strategy or no strategy at all, and many will see equity release as a solution to their capital repayment deadline.

Will Hale, director at Key Partnerships, said: “Selling up to pay off an interest-only mortgage can make financial sense but it is worrying if older homeowners are being forced to sell and are not aware of all their options.

“Equity release enables people to stay in their home and not have to downsize, or even in extreme cases lose their house. Some lenders are engaging with equity release as a solution and we would urge others to follow.

“Estate agents are valued as a source of financial guidance and it is clear that those who can discuss equity release as an alternative to selling will be able to benefit from an additional revenue stream by referring potential clients to a specialist.”

Key Partnerships is increasingly focussing on customers referred by estate agent introducers and has allocated a number of dedicated Key Retirement advisers experienced in dealing with the complexities of interest-only.

Key Partnerships is a B2B referral service providing a whole of market equity release solution for introducers and their clients, through parent company Key Retirement; leading specialist provider of financial solutions to the over 55s. Over 7,000 introducers encompassing IFAs, mortgage brokers, accountants, solicitors and estate agents are registered to refer business to Key Partnerships. In return for the referral, intermediaries earn on average £1,319 on completion of the loan.

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