MANY of us are sitting on a

goldmine - our home. But are we making the most of what's

probably our biggest asset? Is it sensible to struggle long and hard to pay off our mortgages only to be short of money in later years?

Unlocking the value tied up in our homes - known as equity release - has traditionally been viewed as a last resort, but it could be set to play a more important role in our lives as support from the state diminishes and we are forced to fall back on our financial resources.

''Taking equity release forward in a safe and secure way will be one of our priorities this year,'' according to Peter Williams, deputy director-general of the Council of Mortgage Lenders. ''We think it will be a key stepping stone of policy and market

development.

''There certainly appears to be plenty of scope for tapping into the rich seam of wealth represented by our homes to finance other aspects of our lives - and there are signs that competition to provide the key to that wealth is hotting up among big lenders.''

Bank of Scotland says there is more than #800bn of equity in residential property in the UK, after allowing for outstanding mortgages, all just waiting to be turned into usable cash.

Until this week, Bank of

Scotland had the market pretty much to itself with its shared appreciation mortgage - and it will continue to dominate the

market in Scotland.

But Barclays Bank has launched its own shared appreciation loan and, although it's only available to homeowners south of the Border, other lenders are waiting in the wings. NatWest is expected to launch its equity release scheme later this year.

More competition could bring lower charges for borrowers. At Bank of Scotland the fee is a pretty hefty #500, but that may well be trimmed now to keep in line with new rivals.

Both Barclays' and Bank of Scotland's schemes work in much the same way. Homeowners can borrow up to 25% of the value of their property and use the money for whatever they like. They must have no existing mortgage, or one that represents less than 25% of the value of their home, to qualify.

There's no interest - although you can opt to pay with Bank of Scotland if you choose - and borrowers decide when to pay off what they've borrowed, usually when the house is sold.

At that stage the borrower would repay the original amount of the loan, plus a share of any increase in the value of the house since the loan was taken out.

With Barclays and Bank of Scotland this amount is three times the percentage loan borrowed. So anyone taking 25% of the value of their home would have to hand over three-quarters of any increase in value when repaying. For someone borrowing 10%, 30% of any increase would be due.

Remember, it's a share of the increase in value - not the whole value of your property - which is due when the loan is repaid. If you choose to pay interest on your loan the share of the increase you have to pay back is the same as the percentage loan you borrowed.

Bank of Scotland launched its scheme in November 1996 and has so far arranged some #500m of loans. ''Some 90% of borrowers going for the 0% interest option are aged 50 and over, demonstrating the real need among this age group for a product that can provide income at or near retirement,'' says the bank's Neil Forrest.

The great advantage of shared appreciation schemes over the more traditional home income plans is that younger people can benefit.

With home income plans, the level of income depends on the annuity you can buy with the money you borrow - and that in turn depends on your age. Generally only single people aged 70 and over and married couples with a combined age of 150 can expect to receive a worthwhile amount.

If you do go for a home income plan, make sure you buy from one of the four specialist providers which are members of the Safe Home Income Plans (SHIP) scheme - details on 0181 390 8166.