The issues surrounding pensions in the UK affects us all, but it is already a very real and daily challenge for millions of retired Britons.

However, many retired people who manage on a small pension and limited savings are also living in properties which have soared in value in recent years and with the average house price in England and Wales now standing at £180,781 (Land Registry figures for June 2008), people may not be aware of the true value of their home.

Equity release plans – also called lifetime mortgages, home reversion or home income plans – are a way of releasing cash, whether to buy that new car, to pay for a holiday or home improvements, or simply to make daily life more comfortable. These schemes essentially allow you to borrow money against the value of your home, with the debt being repaid from the sale proceeds after your death.

How they work

While there are a range of different schemes offering lump sums and/or regular income, they all work on the same principle: they lend you a part of your home's value in return for a share of the proceeds when you die.

In most cases you will need to be at least 60 years old, have no outstanding mortgage (or you will need to use the equity release money to pay down the existing loan), and own a property in reasonable condition.

Equity release plans can be complicated products and are a major step for many people. Your house is almost certainly the most expensive asset you own; it is also your home. Good advice is therefore key.

Age Concern and the Financial Services Authority, the UK's chief financial watchdog, both recommend getting independent financial advice before proceeding.

We will look at your overall finances to see if equity release is really the best option for you, help find the right type of scheme – bearing in mind that in some cases you could risk losing state benefits and may have to pay extra tax.