Top tips

1. There are different types of product, but most are only available to people who have paid off their mortgage on properties worth at least £40,000. 'Lifestyle mortgages' allow homeowners to remortgage some of their property (usually up to a maximum 50 or 60 per cent).

Most schemes are 'roll-ups', which means that interest is rolled up and added to the mortgage amount, instead of being paid off each month. The total debt is (in the best plans) only redeemable from the sale of the home when the plan-holder (and partner, if applicable) moves into a nursing home or dies.

The other main type is the 'home reversion plan', where the homeowner sells some or all of the property to an insurance company, continues to live there rent-free (or for a peppercorn rent) in return for a cash sum, usually between 35 and 60 per cent of the property value.

2 . Schemes are not appropriate or available for everyone. People on benefits could have their entitlement reduced. And some properties, such as short leaseholds, are not deemed attractive to lend on. Small sums are currently expensive to raise this route. The Home Improvement Trust (0800 783 7569) may be able to help on small sums. Or a pensioner could make private arrangement with a trusted family member to buy the property for a cash lump sum.

3. Lifestyle mortgages will be regulated by the Financial Services Authority from October 2004. There is pressure on the Treasury to extend the regulation to cover home reversion schemes. A detailed Treasury review will begin this autumn.

4. Specialist advisers may be worth visiting. Most high street financial advisors and solicitors will not know much about these products. Hinton & Wild, specialist IFAs, (0800 32 884 32) work almost exclusively in this field. They suggest that independent legal advice - a requirement from most product providers - should cost less than £500 including VAT and disbursements.

5. Some people will be concerned about the shady past of 'home income plans'. Many elderly people were left in serious debt after taking out plans in the Eighties, where they were persuaded to invest the sum they released with the aim of generating a higher income from the investment than the monthly mortgage payments they were due to make. But the investment returns were usually lower than the mortgage payments (which rose when interest rates went up). The problem was compounded by falling property prices, and this type of scheme was banned in 1990. Ship (Safe Home Income Plans) was established in 1991 (0870 241 6060). Most major players have signed up to its code of conduct, which stipulates that plan-holders will not lose their home.

6. Most lifestyle mortgage plans operate on the basis of a fixed interest rate so that the costs of the scheme are known at the outset and cannot escalate if the base rate rises.

7. Major players include market leader Norwich Union (0800 015 4015), Northern Rock and the Portman. New entrants include the Prudential and Saga.

8. Free guides are available from Age Concern (0800 00 99 66 - Factsheet 12, Raising income or capital from your home) and Help the Aged (0808 800 6565 - Equity Release Plans). These comprehensive guides include contact details of providers.