Home owners could be offered mortgages that last until death as a way of defusing Britain's interest-only mortgage time bomb.

Santander confirmed it is considering offering home owners who will be unable to pay off their interest-only deal the opportunity to switch to a repayment mortgage which could potentially last for the rest of their lives.

The possibility of the lender offering a lifetime mortgage is still in development stage, but it could potentially mean that any outstanding amounts left on the home loan would be recouped by the lender upon the sale of the home, which could happen within the customer's lifetime or after their death. The remaining proceeds from the sale would be for the customer, or their estate, to keep.

Such moves could enable people who have insufficient plans in place for how they will repay their interest-only mortgage to remain in their home, without having to downsize or even face repossession.

Someone taking up the product being considered by Santander would see the size of their loan reduce as they would be paying off chunks of it and interest would not be added to the outstanding debt.

But experts also warned that someone considering such an option would need to have detailed conversations with their family members, who could end up forfeiting portions of their inheritance.