Prudential has cut its interest rate on flexible lifetime mortgages from 6.45 per cent to 6.02 per cent, resulting in a typical saving of £7,000 for customers.
A customer whose adviser helps them to drawn down £20,000 when they are 60 years old, a further £10,000 five years later and another £10,000 at age 70, the interest rate cut means that they could save £7,000 over the life of the loan.
The building society has also improved its commission structure so that advisers will now get at least £650 per transaction regardless of the amount of the initial drawdown.
"The lifetime mortgage market presents a great opportunity for customers and advisers alike and our priority is to make this opportunity attractive to them," said Keith Haggart, head of product development at Prudential.
He acknowledged that the rate change made the product cheaper, but said: "It is important to point out that the lifetime mortgage market should not be compared by headline rate alone."
It should instead be compared by "overall customer value", Mr Haggart said. To read more about Mortgage News, click here.
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