House price soared? Unlock that fortune

Many people are finding themselves in your situation where the mortgage has been repaid and house prices have soared. They may not have a great deal of money available in savings, but they are effectively sitting on a small fortune.

Many people are finding themselves in your situation where the mortgage has been repaid and house prices have soared. They may not have a great deal of money available in savings, but they are effectively sitting on a small fortune.

It is difficult to recommend the best way of releasing this equity, as we don't know your ages or your current employment and income situation. But we'll suggest two options.

If both of you are over 60, you could apply for a Home Equity Release Mortgage from Norwich Union. At age 60, you can release up to 18 per cent of the value of your property. For every five years after 60 you can release a further 5 per cent of equity until 80, where you can release a maximum of 45 per cent of its value. The rate of interest is fixed on application; currently, it is 8.25 per cent. Interest payments are "rolled up" until the second applicant dies or the house is sold and the whole loan is repaid. It is not connected with any increase in the value of the property.

Alternatively, if you have an income, whether from working or a pension, you can remortgage your property to release some equity. The Woolwich does not have a maximum age to its loans as long as you have evidence of an income. At the moment it offers a discounted rate for two years at 5.99 per cent (1.76 per cent discount on the standard variable rate). There are no penalties or tie-ins, so if you want to make lump sum payments to reduce the loan, there is no charge.

If you took the loan on an interest-only basis, the monthly payments on a £70,000 mortgage would be around £350. Of course, this means the capital remains outstanding throughout the term, and you must repay the full £70,000 from either investments or selling the property. If you choose a repayment mortgage over 20 years say, monthly payments would be just over £500.

If one or both of you are still working and a fair way from retirement, you could approach any lender who would allow you to raise capital for "any legal purpose", subject to income levels. Halifax offers a Rapid Remortgage where it will pay for your legal fees and a valuation. It has a two-year discounted rate of 5.69 per cent with no penalties (2.05 per cent discount from the standard variable rate).

This week's query is answered by independent financial adviser Ray Boulger, technical manager at John Charcol. Tel: 0800 718191, www.charcolonline.co.uk