The mortgage product, priced at 6.35 per cent, allows the client to release an initial amount of money, while maintaining a reserve fund which they can access at any time for 10 years.
Clients are also able to withdraw cash any number of times, meaning they can access money if and when they need it.
Daren Carter, director of sales and marketing at Norwich Union Personal Finance, said: “Since entering the equity release market in 1998, Norwich Union has been at the forefront of many product developments. The launch of the cash reserve option is an exciting addition to our product range and means we are now the only major provider to offer reversion, drawdown and lump-sum lifetime mortgage plans.”
The equity release market has seen demand for drawdown products increase significantly over the last few months and the move by Norwich Union represents this.
The provider also insisted its strength as an established name in the equity release market would give intermediaries confidence in its ability to supply money over the term of the mortgage.
Clients originally have to take a cash sum of at least £10,000 and set up a cash reserve containing a minimum of £5,000.
The minimal withdrawal from the cash reserve is £5,000 and interest is calculated on each individual sum removed at the rate on the day.
Stuart Wilson, managing director at Equity Release Advisory Service, said: “When you get a new product, you have to see where it is pitched and it seems to be pitched to test the market. Hodge does a similar product but the rate is 6.21 per cent and it has a 15 year guarantee so it might have to tweak the product later on.
“What it does do though is reflect the importance of drawdown, which seems to be the dominant force in the equity release market.”
