If you are a UK citizen resident in Britain today, and you are in the process of investigating various methods by which you might bolster your pension fund, you will undoubtedly come into contact with the concept of equity release.

This kind of scheme is perhaps the most popular solution to the problem of income during your retirement; however it is not without its pitfalls. Before you get on to exploring the effect of compound interest and other salient issues, it is important that you have a solid understanding of the basics of an equity release plan.

Equity release is, in fact, a broad, general term for a number of different financial policies. Included amongst these are lifetime and retirement mortgages and home reversion schemes. While each of these plans differ in a few, subtle ways, they all operate according to the same principles.

Equity release schemes allow you to borrow money from a third party in such a way that the loan is calculated according to the value of your property. Essentially, the policy allows you access to capital that may be tied up in your home and other assets, while at the same time allowing you to continue to use these assets.

Before you dive straight into the first equity release plan that you can find, it is always a good idea to discuss your options with an expert in the field. Someone who is trained to understand the finer points of this kind of policy will be able to direct you towards the one that is best suited to your needs.