Thousands of older homeowners approaching the end of their interest-only mortgage terms may be unaware of the range of later life lending options available to them, according to Air.

The later life lending platform has warned that a significant number of borrowers could face poor financial outcomes if they do not receive advice on all available solutions as interest-only mortgages reach maturity over the next two years.

According to data from UK Finance, around 60,000 interest-only mortgages with a combined value of approximately £9 billion are due to mature by 2027. Air said many of these borrowers have loan-to-value ratios below 50%, placing products such as lifetime mortgages and retirement interest-only (RIO) mortgages within reach for a large proportion of homeowners aged 55 and over.

The firm said a lack of awareness around later life lending options could lead some borrowers to make decisions that are not in their long-term financial interests. This may include withdrawing pension assets to repay outstanding mortgage balances, potentially creating tax liabilities, crystallising investment losses or reducing retirement income options.

Others may move onto repayment mortgages that require full capital repayments, placing additional pressure on household finances as retirement approaches and income levels change. Some borrowers may also feel compelled to sell their homes despite having alternative options available.

Air noted that the Financial Conduct Authority’s recent consultation paper, CP26/18, highlighted both lifetime mortgages and RIO products as potential solutions for borrowers aged over 55 who are approaching the end of an interest-only mortgage term. The consultation also places an expectation on the industry to ensure customers are made aware of the full range of available options.

The lender said today’s lifetime mortgage products differ significantly from those available a decade ago. Features can include fixed-for-life interest rates, flexible interest payment options, no affordability assessment and consumer protections such as a no negative equity guarantee and certainty of tenure.

Will Hale, chief executive of Air, said: “These are real people facing what can be a worrying deadline, and our industry has a collective responsibility to make sure they understand all their options.

“Advisers, lenders and sourcing platforms all have a role to play in ensuring later life lending is part of the conversation wherever it is relevant.

“A borrower with significant equity in their home and an IO mortgage maturing in the next two years has more options than they probably realise. But they will only benefit from those options if the right conversations happen at the right time.

“The data points to a large group of consumers who stand to gain from better joined-up thinking across the industry, and that is exactly what we should be focused on delivering.”

Air said greater awareness of later life lending products, combined with appropriate advice, could help many borrowers manage mortgage maturity events without disrupting wider retirement planning.