'Home reversion makes me shudder'

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The Independent Online

Wage; the older you are, the more a lender will offer, but it won't usually be above 40 per cent of the home's value.

Say you borrowed £50,000 at a fixed rate of 7 per cent. This interest would roll up over the remaining years of your life so that, a decade later, the amount owed would virtually double to £98,358, according to research from analyst Defaqto. Live for 20 years, and this rises to £193,484, it calculates. If, in that time, prices don't rise substantially, the sale of your property might leave very little for your heirs.

Many lifetime schemes carry a "no negative equity" guarantee, which means the amount to be repaid will never outstrip the value of your house.

As for fees, the total payable to an adviser for a loan arrangement and valuation can easily top £1,000, Defaqto shows.

Anyone considering equity release should also look at alternatives such as "downsizing" to a smaller home. It is essential, too, to keep family informed.

"Families should be involved with all equity-release decisions," says Jon King, chairman of industry body Safe Home Income Plans. "Our members insist an independent solicitor is there with you [when you take out a plan] so you know you're reducing the size of your estate."