This is a problem faced by many these days.  Mortgage paid off, or quite small balance left, surrounded by valuable 'bricks and mortar' which you've possibly worked hard to pay for, but because of your financial circumstances receiving insufficient income to maintain a reasonable life style (and pay for that occasional holiday to far flung places perhaps!).

Fortunately, there are often measures you can take to improve matters as we will outline below, but before we even get that far, a word of advice!  Unless there are particular reasons for not doing this, please talk to other members of your immediate family before taking any action, and seek legal advice, as most ways of raising the additional income you require will involve your future ownership of the property in one way or another...

If you are in receipt of an income by way of a pension from previous employment, for example, then very often even if you have retired you can still, in many circumstances obtain a conventional mortgage regardless of your age, or that you have retired. This could be a better option, although you would normally have to pay at least interest on the amount borrowed, whereas under the 'equity release' arrangements detailed below very often no repayments at all are required, with the interest 'rolling up'.

Very often, senior citizens do not have any income at all apart from state pension and/or benefits and in such cases the way forward is often by means of an equity release arrangement, whereby in return for a cash sum, or occasionally, as an alternative, a regular income, the property deeds are handed over to an appropriate lender (building society, insurance company or bank) as security for the advance they make.

This, of course, is precisely what happens under any normal mortgage arrangement but there are important differences, some of which are mentioned below.

1.  The facility is normally only available where a single applicant has reached a minimum age of 60 and for joint applicants the combined ages must be at least 120. The higher the above ages, the more that can be borrowed. Some plans are not available to applicants under the age of 65.

2.  The property must be conventional, owner occupied, in good condition freehold or long leasehold, and usually with a minimum valuation of £60,000.  The minimum loan is usually about £20,000, and by looking at the age provisions a combination of these figures will often rule out an application immediately!  This is because the amount that can be borrowed is linked to age - the older you are the higher percentage of the property valueyou can obtain

3. With the majority of plans there are stringent built in safeguards - indeed any arrangement which does not offer these should be rejected out of hand  Amongst the minimum essential safeguards should be:

• the right to remain in the property regardless of happenings for the rest of your life

• the ability to move elsewhere without penalties

• the power to sell the property if your circumstances or requirements change

4.  The actual cash sum which can be obtained will vary depending on the age of the applicants and the value of the property but is a relatively small percentage of the property value.  Typically at age 60, the maximum percentage of the property value that can be borrowed is 20%, at age 75 the figure rises to around 35% whilst even at age 90 you could borrow no more than 50% of the value of the property as a rule.  These figures assume you are obtaining a loan based on the security of the property - in other cases higher amounts can be realised where you actually sell the property to the provider.

5. The whole procedure can be quite complicated and whilst all of the providers of these facilities offer completely without obligation free home consultations to discuss the matter, we would re-iterate that legal advice should be sought and all relevant family members consulted if you are retired and contemplating seeking to raise finance on the security of your home.

Remember, that with an equity release product you normally pay no interest at all on the borrowing, and the interest 'rolls up' at a compund rate.

This does mean that the amount owed increases substabtially over the years, which is why we emphasie the importance of discussing the pro's and con's of an equity release mortgage very carefully before proceeding with an arrangement.

Indeed, after discussion, there may be better and more favourable ways of meeting your objectives - depending on family circumstances it might be possible for an individual family member to purchase the property as an investment, with the lump sum realised being invested to produce a regular income and a guarantee of a life long tenancy being provided, for example. Again, legal and taxation issues need to be carefully considered.

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