Citizens Advice has found that almost one million mortgage holders have no plan on how to repay and could have their home repossessed.

New research estimates 934,000 people with interest-only mortgages have no arrangement to pay off their debt   when the term ends, and with a lack of time to sell their homes to find capital they risk having their homes repossessed.

Out of the 3.3 million interest only mortgage holders 1.7m said they had no linked repayment vehicle such as an endowment or ISA.

Gillian Guy, Chief Executive of Citizens Advice, said people buy a home for stability, but interest-only mortgages have forced many into a financial black hole.

“It is good rules around these mortgages have changed, but there are many people who previously took out these products and face losing their home,” said Gillian.

“Lenders have to exhaust all other options when borrowers get into arrears – it’s time to level the playing field so that interest-only customers get the same protections when their mortgages mature.

“It is also important that people can get independent advice, guidance and support about how they can plan and manage their finances."

Banks have been urged to help vulnerable individuals and the British Banking Association (BBA) has joined forced with charities to help support these customers.

Eric Leenders, BBA Executive Director for Retail Banking, said the industry has a responsibility to look after all customers.

“It isn’t always easy to detect the signs of vulnerability, and people don’t always feel comfortable talking about their personal circumstances but we hope this taskforce will find the best ways to make financial services work for the people and families who need help the most,” said Eric.

Joanna Elson OBE, Chief Executive of the Money Advice Trust, said she was pleased to be chairing the new taskforce and it had a real opportunity to build on the best practice that had been developed.

“The challenge now is to ensure that all customers who are vulnerable are treated in the right way, to enable them to access the services they need,” said Joanna.

“This is of course an issue that goes far beyond financial services, and I am encouraged by early signs that we will be able to join up our efforts with other work on vulnerability that is going in other sectors, such as utilities.”

Ashley Ilsen of Regentsmead concluded: “The action taken when a borrower can’t repay can vary from lender to lender.

“Some lenders may be keener than others to become mortgagee in possession, however the frequency in which this happens is usually testament to the lender’s underwriting.

“At Regentsmead this hardly ever happens and if there is ever an issue with repayments we feel the first action is to have a good open dialogue with the borrower to try and agree a resolution.”