There are several types of equity release mortgage plan available from various banks and building societies. In essence, these normally lend you money against part of the value of your home leaving you to make interest only payments (which is normally fixed to give you certainty regarding the amount of regular repayments), with the capital being settled when your house is eventually sold.

A refinement on these mortgage schemes is to add the interest to the loan – effectively rolling up the interest rather than you paying it. This interest is added to the loan, which is again settled when the house is eventually sold. Essentially, these schemes lend you money against part of the value of your house, but with the interest being added to the loan rather than being repaid by you.

Assuming the loan and accumulated interest amounts to less than the value of your house, the remaining value can be left to your heirs (or whatever else you may choose to do with it in your will).

Variations on these schemes include variable rate interest or early repayment penalties, both of which are best avoided according to many experts.

The amount of equity (cash) that can be raised through these schemes is usually between 25% and 50% of the property’s value, but as with all release schemes, the actual amount will depend on factors such as your age, health and so on.