Other types of mortgages

You should speak to an Independent Financial Adviser for advice on buy-to-let mortgages, as it's a complex subject. You'll find details of your local IFA in Yellow Pages www.yell.co.uk or visit www.unbiased.co.uk

Mortgages to release the equity in your home
There's a lot of cash tied up in your home. You can release the 'equity' (or cash) by remortgaging and taking out a larger loan - that's as long as you have:

• Enough income to qualify for the larger mortgage.
• Enough equity in the property - in other words, its value has risen enough to allow you to borrow more.

But what if you've already retired, are no longer earning and you've already paid off your mortgage? Then you can think about 'equity release'.

What are equity release schemes?
Aimed at older homeowners, these are a way to unlock tied up capital in your home. This is how equity release schemes work:

• A proportion of the property is normally sold to a company providing one of these schemes.
• You do not have to move - you can still live in your home.
• In exchange for giving up a share of your home, you get a lump sum to spend or invest.
• The equity release company gets its share when you die, sell your home, or move into long-term care.

There are fees to pay and there are strict conditions. Generally, you need to be at least 65 years old. You can borrow around 30 per cent of the value of your home - but it must be worth more than a certain amount.

Key pros and cons of equity release

Pros

• For anyone who's elderly, it's a way for them to stay in their homes and get extra income.

Cons

• Equity release schemes may be expensive, and you could find there are other cheaper ways to borrow money.
• The company will not give you the full market price for the share of the property you are giving up - they will take a part of it to repay the money they have given you.
• You will lose out on the growth in property values on the share of the property you've sold.