HOMEOWNERS who want to cash in on their property without moving house are being spoilt for choice. Prudential is the latest to offer a lifetime mortgage, while other lenders have cut their rates.

The rate on Saga’s lifetime mortgage has dropped by a quarter of a percentage point to 6.39 per cent, while Norwich Union has cut its rate to 6.3 per cent.

Prudential’s deal, which allows borrowers to roll up the interest on the loan until they move home or die, is available from September.

Traditionally, borrowers who take out lifetime mortgages receive a lump sum, on which they pay interest for the term of the loan. Those who do not spend the cash immediately must then find a home for the money to provide a regular income.

Borrowers with the Pru can access an initial payment of at least £20,000 and as many subsequent payments as they choose. Interest will be calculated only on the sums withdrawn. But brokers remain wary because the insurer has yet to announce the interest rate that it will charge, although it is likely to be about 6.5 per cent.

Melanie Bien, of Savills, a mortgage broker, says: “Until the Pru announces the rate it is impossible to say whether it is a good or bad product.”

Some lenders, including Northern Rock and Mortgage Express, offer drawdown loans that allow a set sum to be withdrawn every month.

GRÁINNE GILMORE