Almost 1m people with interest-only mortgages have no plan on how to pay off their debt when their term ends.

Citizens Advice 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 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.

A protocol was launched three years ago which now gives lenders a legal obligation to consider alternative options before starting possession action, including extending the length of a mortgage, changing the type of mortgage and giving people reasonable time to sell their property if necessary.

However, the protections do not apply to interest-only mortgages at the end of term – at the very point, says Citizens Advice, when many borrowers discover they are in trouble.

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.

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

“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.”

According to the Financial Conduct Authority (FCA), due to previous peaks in the sale of interest-only mortgages, waves of potential repossessions are expected in 2017-18, 2027-28 and in 2032.

In 2013 the FCA called on banks to contact all borrowers with interest-only mortgages ending before 2020 about how they plan to repay, but only around 30% of borrowers responded.

Citizens Advice said lenders should have to do more preventative work to help customers prepare for the end of their mortgage. It urged companies to phone customers or offer a face-to-face meeting.

The figures were arrived at following a poll of 2,137 adults in May and June.