Almost 1m people with interest-only mortgages have no plan on how to pay off their debt when their term ends, according to Citizens Advice which warns that of 3.3m people with interest-only mortgages, around 934,000 have no pay-off plan.

A Yougov poll commissioned by Citizens Advice also estimates that 1.7m people have no linked repayment method, such as an ISA, in place, and 432,000 had not even thought about how they would pay off the capital. Some people even said they were not made aware that they would need to repay the capital at the end of their mortgage term.

In 2012 the rules were tightened to ensure all people taking out interest-only mortgages had a repayment plan in place – a move which has resulted in a virtual wipe-out of such products sold to owner-occupiers since.

However, Citizens Advice says many of the people who had such plans in place pre-2012 need more support to avoid the possibility of their homes being repossessed.

Citizens Advice chief executive Gillian Guy said: “People buy a home for stability, but interest-only mortgages have forced many into a financial black hole.”