“Both the lender and customer will have to consider how to deal with that position. The last resort for the lender would be to take proceedings for possession but, when faced with an elderly and potentially vulnerable customer, this approach would have to be carefully considered.”
Ms Ingram thought this was a real problem that raised the possibility of “repossession” and “bereaved and elderly people being forced to move home”.
She added that Rio mortgages were simply “kicking the can down the road” in regards to the problem of interest-only mortgages.
But Rio provider Hodge has defended the product after its own data found only a fifth (21 per cent) of Rio mortgage holders had taken out the mortgage to consolidate debt.
About one in 10 (12 per cent) did so to give gifts to family members, while 13 per cent used the mortgage to purchase another property and 7 per cent funded home improvements.
Managing director for mortgages at the lender, Matt Burton, said: “Rio mortgages have the potential to fulfil a key need in the retirement market, providing lenders continue to evolve their offerings based on what customers want.
“Those who view Rio mortgages as just an additional step toward equity release aren’t considering the full-potential of them.
“It’s important to remember that the Rio market is still incredibly young and needs time to develop based on customer feedback and demand.”
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