Billions of pounds tied up in equity of homes.

It is estimated that retired people in the UK are sitting on several billion pounds worth of equity tied up in their homes.

In an insecure world where the only certainty is, as they say, death and taxation, unlocking capital in your biggest asset is worth investigating.

However, this is one of the most important decisions you can make and you must receive independent and competent advice before doing anything.

There are three basic alternatives, all approved by the Safe Home Income Plans trade association.

Lifetime Mortgages

You mortgage your home taking a lump sum or income. Interest is added to the loan and the whole debt is paid off using the proceeds of the sale when you die. Your debt will grow, and options for selling or moving house may be compromised.

Home Income Plans

Here you mortgage your home and buy an annuity. However, low annuity rates mean that theses schemes are normally unsuitable for those younger than 80 years old. You receive an income for life, not a lump sum, but this will be attacked by inflation. Interest is deducted automatically and any increase in the value in the retained proportion of the house belongs to your family.

Home Reversion Schemes

This involves selling part, or all of your house to an investment company, who will pay a lump sum or income for life. You remain in your home as a tenant paying a peppercorn rent.

When you die, the home is sold, and the proceeds go to the company. Any proportion of your home not originally sold goes to your estate, further cash can be released if needed.

In these more than in most financial arrangements the penalty for ignorance could be your misery and your family's loss.

You must get advice from qualified people who can help your family now and in the future.

* For any information on Equity Release please contact Simon Richards at HRC Group on [phone].