Are you retired? Do you own a home? Are you finished or almost finished paying the mortgage on it? Do you need an extra source of income to help meet your daily needs or to do the things you have always wanted to do? If your answer to all of these questions is yes, equity release schemes can be the solution that you have been looking for.

Firstly, equity is normally defined as the difference between the value of your home and the total amount you owe on it. In your case, you may have a lot of equity in your property due to the fact that you are finished or almost finished repaying your mortgage and at retirement age. Equity release schemes are the vehicle which facilitates the releasing of equity from your home by way of securing a loan to the title deeds of your property.

The advantage of equity release is that the money which you receive is tax free and can be used to finance anything of your choice. This is what makes it different from other forms of loans. The two main types of equity release schemes are the home reversion and the lifetime mortgage.

The home reversion scheme allows you to sell a part or your entire property to a home reversion provider. This form of equity release is only available to people with the youngest applicant being over the age of 65. You might be wondering what the difference is between selling your property to a normal buyer and an equity release provider. There is one major difference. When you sell your property to a normal buyer, you need to relocate and possibly pay a rent. However, if you sell your property to an equity release provider, the provider allows you stay in your home until you die or until you are no longer capable of taking care of yourself and can no longer remain in your home. There is also NO rent to pay so it can certainly alleviate your finances.

Equity release schemes under the home reversion plan are put into a lifetime tenancy agreement. This agreement names anyone in the home that is over 65 and thus gives them the right to stay in the house. It means if you need care, but your spouse does not your spouse can remain in the house until they are ready to move. The key benefit of this plan is the savings you find in the end and the inheritance you can give your family.

The lifetime mortgage is now the most popular form of equity release scheme. It allows you to use your property to obtain a loan, like a residential mortgage. The difference between obtaining a normal mortgage and a loan from an equity release provider is that the equity release provider does not require you to make any repayments for the rest of your life. When you die, your property will be sold to repay the loan. There is however the option for the ownership of the property to remain within the family, should the family members raise alternative finance, such as a buy to let mortgage, which can then repay the equity release company.

In order to qualify for a lifetime mortgage you only need to be 55 years old and your property need to have a value of more than 60,000 pounds. These schemes are growing in demand as the older generation understands the importance of quality of life in retirement.

Like home reversion there are some things that may not be as appealing as others. You will have a mortgage to repay. Your family may need to sell the home to make this happen. Even if they sell the home there is no guarantee of any inheritance.

It is in your best interest to compare various equity release schemes to find the one that best fits your needs. You have plenty to choose from in lifetime mortgages alone. After all, if you can make a monthly payment you could go with the interest only loan. This loan ensures you pay interest, but the principle amount remains until death.

Additionally, there is the drawdown mortgage which you make no payments on, but you only accrue interest on the amount you withdrew from the account. Perhaps you only needed a ten thousand pounds initially, but in five years you need a thousand pounds. Under this type of equity scheme you can take out what you need, thus giving you the best of the equity release schemes that can help you.