More than 80,000 homeowners have lost financial assistance with their mortgage, since the government changed its Support for Mortgage Interest scheme, according to an analysis of state figures by Royal London.
An examination of statistics from the Department of Work & Pensions by the financial group found that 18,000 claimants from a caseload of 103,000 continued with support under the new loan arrangement which replaced grants on 6 April 2018.
Individuals that decided not to take a loan to replace their grant payments will no longer receive assistance under the revised rules.
The policy was originally outlined in the Summer 2014 Budget.
The changes were part of a wider commitment to austerity to reduce government spending.
Helen Morrissey, a personal finance specialist at Royal London, said her company has been lobbying the government to reconsider its approach amid fears of a sharp increase in mortgage arrears and missed payments.
She said: "The changes to SMI came in from 6 April and yet these figures show the government has yet to speak to some 30,000 claimants about the changes and only 18,000 have said they will take up the loan option.
"As it stands well over 80,000 people have now lost their mortgage support and we have no idea what strategies they have in place to meet these payments. The likelihood is that we will see people start to default on their mortgage payments."
Ms Morrissey called on the government to "put a brake" on the changes to ensure that these homeowners are able to make an informed decision, adding that there was the risk that these individuals could face "disastrous consequences."
Advisers acknowledged that the change may have been unsettling for those impacted, but underscored that those were who previously entitled to support, were still eligible to receive assistance, albeit in the form of a loan.
Ray Boulger, senior mortgage technical manager at John Charcol, said while those who qualify for SMI would prefer to receive SMI payments as a grant rather than a loan but a loan is now the only option.
Mr Boulger said: "It is difficult to see why, providing the options are properly explained, anyone would choose to risk being repossessed rather than accept a soft loan."
Mr Boulger said that the loans are secured on property, by way of a second charge, but have a comparatively low interest rate and no monthly payments required, with the only repayment required when the property is sold.
Approximately 40 per cent of SMI recipients are low-income pensioners, according to Mr Boulger, who qualify for SMI because they are receiving Pension Credit.
He said: "Some of these borrowers will have a loan-to-value (LTV) too high to qualify for a lifetime mortgage but some could choose a lifetime mortgage instead of the SMI loan."
