With the current economic climate, more and more people are considering taking out what is known as an equity release scheme. This guide highlights some of the dangers involved, however, some of which are not always made clear.

1) An equity release is simply another way of getting into debt. You can take out money up to the value of your home, in order to secure a form of income, but it still carries the same risk as a mortgage, and it is certainly something you should not consider unless you are in retirement.

2) The equity release means that you are technically foregoing owning your property, meaning there is far less in the way of inheritance for any of your children or family. This is certainly something to consider when thinking about taking out an equity release scheme.

3) In the end, you will lose your property. This is the form of catch involved with the scheme, as you need to repay the provider of money later on.

So whilst it may seem like a good idea at the time in order to try and find another source of income, always remember that businesses that offer these schemes are out to make money, rather than to help you personally.

An equity release scheme fits certain needs, but as with any major financial commitment – read the small print – very carefully.