Prudential enters equity release

The firm is to introduce a lump sum product that allows borrowers to ring-fence 10 or 20 per cent of their property value. With an estimated £1.1 trillion of equity tied up in property owned by the over 65s, the product allows 55-year-olds to access equity with a minimum property value of £100,000.

The plan allows customers to access one-off lump sums, and a maximum release option can also be added to the product. Minimum loans are £10,000 for drawdown and £20,000 for lump sums. As well as the introduction of the lifetime mortgage, the drawdown product has been relaunched as the Increasing Cash Reserve plan.

Keith Haggart, director of lifetime mortgages at Prudential, claimed that an explosion of lifetime mortgages was inevitable. He said: “What customers want is face-to-face advice and four fifths of those asked said they see equity release as a key area for the future. We see this as a key part of the overall retirement provision and we try and keep borrowing to a minimum so the product can adapt with them as their circumstances change.

We have a range of products that will meet 100 per cent of the needs of brokers. We believe lifetime mortgages balance our annuity business going forward.”

Simon Chalk, mortgage planner at Mortgage Portfolio Services, said: “It think it’s great that a company like this is showing innovation in equity release but I just hope that it’s not using the mark to market form of penalty pricing that it has used in the past.”

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