Equity release schemes, which allow homeowners to free up cash by taking out a loan against their property can be expensive, inflexible and leave you with little or no equity in your home, severely limiting your choices later on in life, warns the consumer body Which?

For example, borrowing £80,000 through a typical lump sum roll-up equity release scheme on a £350,000 property could end up costing £256,570 after 20 years or £343,350 after 25 years.

For older people, equity release schemes may seem like a good way of raising money but they are high-risk products says Which? who believes they should be used only as a last resort.

However, the industry has been quick to hit back at the report, particularly Norwich Union, currently the lender with the largest market share of equity release schemes, who was singled out by the Which? report.

Which? said it believed the way some of these high-risk products are advertised is irresponsible and quoted Norwich Union, for example, as suggesting its scheme could pay for a trip to New York or 'something for the family'.

If someone took out the minimum loan of £15,000 with Norwich Union, in ten years they would owe around £28,000, said Which?

Speaking to the BBC, Daren Carter, sales and marketing director at Norwich Union Personal Finance said saying Which? had mis-represented the industry. "We were at the forefront of lobbying to get the products regulated," he said.

Which? says there are alternatives to equity release that should be considered first, such as downsizing or even borrowing from family, who could be paid back when the house is eventually sold.

Those who need to increase their income should check their eligibility for state benefits, and those who need money for essential property repairs or improvements should check their eligibility for a local authority grant.

Malcolm Coles, editor, Which?, said: "If you're over 60 and worried your pension won't be enough to live on, an equity release scheme might seem like a good idea. However, think long and hard before committing to one of these high-risk products."

"Lenders want to sell you a lifestyle dream, but the reality can be very different. These schemes could turn into a financial nightmare which can stay with you the rest of your life."