Older homeowners can be reluctant to trade down, but two very different financial products now on the market allow them to access a lump sum based on the value of their home.

Owning your own home in retirement provides great financial security but you can't eat financial security. If you want to get your hands on some of the equity you have built up over the years, the only way to do it is to borrow or sell.

Homeowners, even those in straitened financial circumstances, are often unwilling to sell up and move to a cheaper property. There are alternatives, however. Two very different financial products allow older people to access a lump sum based on the value of their homes.

The first is a roll-up mortgage for over-65s, available from Bank of Ireland. Life Loan has been on the market for a little over a year and some 800 customers have drawn down finance to date.

The average loan amount is €47,000. Applicants can borrow up to 30 per cent of the value of their homes at a fixed rate of 6.7 per cent for the first 15 years. At the end of the term, customers are offered a choice of either a new fixed rate or a variable rate.

With Life Loan, no repayment is necessary until one of three events occurs: the property is sold, the owner vacates the property for more than six months, or the owner dies. The funds can be used for any purpose and the maximum loan is €254,000.

Residential Reversions Ltd offers a different deal, which allows homeowners aged over 70 to sell a share in their property. So far the Homeowner Extra Income Plan is only available in the greater Dublin area, but Residential Reversions expects to offer the product in other urban areas from April. To apply, your property must be worth at least €190,000.

Typically clients of Residential Reversions are in their early 70s and the average portion of the house signed over to the company is 35 to 40 per cent.

Mr John Murphy, operations manager at Residential Reversions, says the company deals with people whose children are financially independent.

"We have found that adult children have been very supportive of their parents' decision."

With the Homeowner Extra Income Plan, the client transfers part of the value of their property to Residential Reversions. This is known in Britain as a home reversion scheme.

The minimum share that can be sold is 25 per cent. If your circumstances change you can top it up. The maximum you can release is 100 per cent.

The percentage transferred to the company is secured for the benefit of the company by a legal deed.

An important point to note is that Residential Reversions buys the share of the property at a discount to the market value. The discount varies according to the age of the clients but would be around 50 per cent for a couple aged 75.

After the deal goes through, the company will monitor the condition of the property on an ongoing basis, making inspection visits every three to four years.

The homeowner can opt for a lump sum, a life income or a combination of both. Even if the clients have transferred 100 per cent of the property, they are entitled to continue to live there for the rest of their lives, or until they move out permanently.

There may be some resistance to the idea of relinquishing part of the ownership of your home entailed in this arrangement.

Life Loan also has its drawbacks in the long term. What really matters in taking a step of this importance is whether the money you get today is more important to you than the value of your property down the road.

Bank of Ireland has a team of 70 Life Loan consultants, who provide customers with a table clearly showing the interest repayable up to 15 years. A couple aged 75 and 73, for example, with a home worth €250,000 could borrow €62,500 at a fixed rate of 6.77 per cent (6.9 APR).

The longer you live, the more you owe and it is possible that the interest and capital would eventually overtake the value of your home.

In such cases, Bank of Ireland has given a guarantee that it will shoulder any negative equity. In other words, the borrower will never actually owe more than the value of the property.

Both Bank of Ireland and Residential Reversions stress that entering into an equity-release arrangement is a major decision and it is necessary to get independent legal advice before making a commitment.

Customers are also encouraged to discuss the product they have in mind with their family so that they are sure it is the right move for their circumstances.

As for those who have already signed on the dotted line, how are they spending their new-found wealth?

Ms Olive Moran of Bank of Ireland says the funds are being used for several specific purposes.

"In the main, the monies are being used for home improvements, to give financial support to other family members, for purchasing holiday homes or to generally improve the quality of life of the customers."

Mr Murphy agrees that people are using the finance to enhance their lifestyle.

Others are using the money to buy a second property here or overseas, while some people are happy with the security of having money in the bank.