Equity release is an excellent way for people to access the equity which is tied up within their home, but who do not wish to sell, in order to do so. However, it is important to fully understand what equity release is and what the alternatives are before proceeding further and committing to an equity release scheme.

Equity release explained. is essentially a way in which a provider releases either a lump sum of cash or an ongoing financial income to a person, and in exchange, a legal charge is put against the property. It can be either in the form of a home reversion or a lifetime mortgage. For both options it is not necessary to make any repayments. However, the interest on the mortgage is rolled into the amount owed and therefore over time the balance owed increases.

An alternative offered is the Retirement Home Plan. Like an equity release scheme it allows the customer to access equity within their home. However, it differs from an equity release scheme in that monthly repayments are made on the interest. This means that over time the balance of what is owed will not increase.

The Home Retirement Plan allows its customers a clearer sense of what they own within their own home and therefore what they can leave as an inheritance to their families. This may give greater peace of mind in that it can seem more manageable and predictable.

In order to fully understand the implications of an equity release scheme it is important to ask for a financial forecast of how the balance will grow over time if either the housing market falls or indeed grows.