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Boulger slams flexible loan claims

John Charcol senior technical director Ray Boulger says some lenders are misusing the word flexible to lure customers into buying lifetime mortgages.

Boulger criticises Prudential for calling its lifetime mortgage flexible when he says it is a drawdown product. He says it is a market problem, not just confined to Pru, and it would help borrowers if a definition of drawdown was established to prevent confusion.

Equity Release Advisory Service head Stuart Wilson called on Safe Home Income Plans to come up with a definition but chairman Jon King refused, saying it would stifle innovation.

Boulger says: “Pru’s product is a drawdown and by calling it flexible, they are contravening MCOB as there is no ability to make partial repayments without charge. Lenders can abuse the term for market purposes.”

Pru head of sales for lifetime mortgages Jan Holt says: “We would like to make it clear that the flexibility of our property value release plan must be seen in the context of the lifetime mortgage market, not the residential mortgage market.

“Our plan is a lifetime mortgage, where interest is accrued on the amount advanced, so the facility to overpay and then borrow back is not something that is available.”



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