Many people are unsure of exactly what the best way to access equity tied up in their house is. A common misconception is that equity release means having to sell your home and downsize. This simply is not true.

With either an equity release scheme or a retirement plan such as the Halifax Retirement Home Plan it is possible to access some of the equity within your home without having to sell the property. Before you make any decisions it is a good idea to seek advice on all options even including advice on selling your property as this may be the most suitable option.

Equity release allows you to withdraw either a large sum or receive monthly payments from your property. This type of plan does not require any monthly contributions or repayments which seems very attractive. However the downside of this is that any interest accrued is rolled up into the loan. This therefore means that over time the actual balance of what is owed will grow. If you are seriously considering equity release as an option then it is advisable to request a personal illustration of your plan to show how it will grow over time. This will help you to understand the implications of such a plan on your estate.

The second option is a plan like the Halifax Retirement Home Plan which is essentially a lifetime interest-only mortgage. Monthly repayments are made and therefore what is owed will not grow. This may be a more attractive option for those wishing to bequeath an inheritance to family members.

Downsizing is also a real option which should be considered when trying to access equity within your own home. This avoids any interest costs and will also help to reduce monthly outgoings which can be very important in retirement.