What Advisers Check: Home Equity Access Scheme for Older Australians

The Home Equity Access Scheme lets eligible older Australians convert part of their home equity into a voluntary, non‑taxable government loan, paid fortnightly, as a lump sum or both. The main trade‑off is simple: you get extra retirement income now, but the debt compounds fortnightly and reduces the equity left in your home for your estate.

TL;DR:

• The scheme has a set maximum loan amount based on age and property value, and once reached, payments stop but the debt continues to grow.
• Interest compounds fortnightly at a fixed rate of 3.95%, causing the loan to increase faster than simple annual calculations over time.
• Existing mortgage balances are deducted from your property’s market value, potentially reducing your borrowing capacity significantly.
• Combining the scheme with other benefits limits total fortnightly income to 150% of the maximum pension rate, and unspent advances may affect your Age Pension assets test.
• The scheme is underused mainly due to retirees’ caution about the long-term costs of compounding interest and complexity, warranting careful long-term planning.

Table of Contents

• How the Home Equity Access Scheme works
• Who can use it and how much you could borrow
• Interest rates, compounding and a worked example
• Costs, security and how the loan gets repaid
• How HEAS affects your Age Pension and Centrelink assessment
• Weighing the benefits against the alternatives
• Applying for the scheme and how long it takes
• Amber Wealth perspective: what we check before recommending HEAS
• The scheme is underused, and that is not necessarily a mistake
• How we can help you weigh up a home equity access scheme
• FAQ
• Sources

How the Home Equity Access Scheme works

The Home Equity Access Scheme is a reverse mortgage style loan administered by Services Australia, with the Department of Veterans’ Affairs handling applications for eligible veterans. Rather than receiving cash upfront in one go, most borrowers choose fortnightly payments on top of their pension, a lump‑sum advance, or a mix of both.

A Maximum Loan Amount caps how much you can draw. It is based on your age, your partner’s age (if you have one) and the value of the property you secure against the loan. Once you reach that cap, fortnightly payments stop, though the loan itself keeps growing.

Services Australia registers a statutory charge, essentially a caveat, over your property title to secure the debt. You are responsible for the costs of registering and later removing that charge, and those costs are added to the loan balance rather than billed separately.

The scheme carries a No Negative Equity Guarantee: the amount you must repay will never exceed your property’s market value, provided you comply with the scheme’s terms. That guarantee can be voided if you provide misleading information, commit fraud or fail to disclose other encumbrances on the property, which is why accurate paperwork matters as much as the interest rate.

Who can use it and how much you could borrow

Eligibility hinges on age and property ownership rather than income. You generally need to be of Age Pension age, or receiving a qualifying payment such as the Age Pension or a service pension, and you must own (or jointly own) Australian residential property to secure the loan.

• You need to be Age Pension age, or your partner does, even if you are not personally receiving the pension.
• The property must be Australian residential real estate, and existing mortgages or loans against it are deducted when working out how much you can borrow.
• Age Pension recipients and self‑funded retirees are assessed differently: pension recipients can draw up to 150% of the maximum pension rate between pension and loan payments, while non‑pensioners have their own calculation.
• Services Australia’s online calculators, accessible through myGov and Centrelink, let you estimate your Maximum Loan Amount and compare payment options before applying.

Market value matters more than most people expect. A home that has appreciated significantly supports a larger Maximum Loan Amount, but any existing mortgage balance is subtracted first, which can shrink your borrowing capacity more than the property’s value alone suggests.

Interest rates, compounding and a worked example

Interest on a Home Equity Access Scheme loan compounds every 14 days, and the rate is set by the Minister and published periodically. Since 1 January 2022, the published annual rate has sat at 3.95%, a detail confirmed in the Social Security Guide’s HEAS interest rate table, which also explains the fortnightly compounding rule.

Because compounding continues on the outstanding balance, the loan keeps growing even after fortnightly payments stop at the Maximum Loan Amount, as Services Australia’s worked examples demonstrate.

The published HEAS rate has held at 3.95% per year since January 2022, compounding fortnightly rather than annually, which means the effective cost grows faster than a simple annual rate suggests.

You can also take an advance of up to 50% of the maximum annual pension rate within any 26‑fortnight period, as described in Services Australia’s advance payment examples. Taking an advance reduces your fortnightly payment amount for the following 26 fortnights, so the trade‑off is more cash now for less income over the following year.

Costs, security and how the loan gets repaid

Settlement and ongoing administration carry real costs, and they are layered on top of the interest already compounding on your balance.

• You pay the costs of registering the statutory charge on your title and later removing it, and both amounts are added to the loan rather than charged upfront.
• Services Australia typically refers settlement and legal matters to a legal provider, and those costs are also recovered from the loan balance, as outlined in the scheme’s settlement forms.
• Repayment is normally triggered by selling the secured property, transferring ownership or settling the estate after death, and a surviving partner’s share of the arrangement needs to be considered separately.
• Notify Services Australia promptly if you take out a new mortgage or any other encumbrance against the property, because failing to disclose it can jeopardise your No Negative Equity Guarantee.

How HEAS affects your Age Pension and Centrelink assessment

Combined Age Pension and HEAS payments are capped so that the two together cannot exceed 150% of the maximum pension rate, which limits how much extra fortnightly income the scheme can realistically add on top of your pension.

• Advance payments are exempt from the Centrelink assets test for the first 90 days, after which any unspent amount becomes an assessable asset, according to Services Australia’s advance payment guidance.
• Once an advance becomes assessable, it can reduce your Age Pension entitlement under the assets test, so spending timing within that 90‑day window matters.
• Changes in your pension rate, how quickly you spend an advance, or acquiring new assets can all trigger a Centrelink review and adjust what you are entitled to.
• Keep your myGov and Centrelink records current and rerun the official calculators whenever your circumstances change, rather than relying on a one‑off estimate.

Weighing the benefits against the alternatives

HEAS offers genuine advantages: the income is non‑taxable, you can choose fortnightly payments, a lump sum or both, and the No Negative Equity Guarantee protects against owing more than your home is worth. The downsides are equally real: compounding interest, added legal and registration costs, and a smaller estate for whoever inherits the property.

1. Review government benefits and budgeting options first, since these carry no debt or compounding cost.
2. Consider downsizing to a smaller home and using the proceeds, which avoids ongoing interest altogether.
3. Look at a private reverse mortgage if you want a lump sum outside the government scheme, understanding that commercial rates and terms differ from HEAS.
4. Explore selling and renting, or a family loan arrangement, where your priorities favour liquidity over keeping the family home.
5. Treat HEAS as one option among several rather than a default choice, particularly once you have ruled out lower‑cost paths.

Independent guidance from MoneySmart suggests exhausting other options before turning to equity release, since compounding interest can materially shrink what is left for an inheritance or aged care costs later.

Pro Tip: Model a long‑term care cost scenario and your estate objectives before drawing on home equity, since the compounding effect on a HEAS loan tends to be underestimated over a 10 to 15 year horizon.

Applying for the scheme and how long it takes

Start by running the official eligibility and loan calculators through myGov or Centrelink to see whether the numbers make sense for your situation before you commit to paperwork.

• Gather your property title details, any existing mortgage statements and identification documents, since inaccurate title information can jeopardise your No Negative Equity Guarantee.
• Submit your application using the relevant HEAS forms or through your Centrelink online account, declaring any other loans secured against the property.
• Processing times vary with the complexity of your title and whether documents are complete, so uploading everything correctly the first time helps avoid delays.
• Services Australia offers phone, in‑person and TTY support, including translation services, for anyone who needs help working through the application.

Amber Wealth perspective: what we check before recommending HEAS

Before any conversation about home equity makes sense, we model fortnightly cashflow needs against sensitivity to aged care costs, estate objectives and whether the loan will affect super or other retirement assets. Red flags we watch for including a short expected horizon for a surviving partner, plans to leave the home to family, or an existing mortgage that already erodes much of the available equity. Our estate planning service and retirement planning checklist both feed into this kind of assessment.

The scheme is underused, and that is not necessarily a mistake

Analysis from UNSW points out that the Home Equity Access Scheme remains underused despite comparatively favourable terms against private reverse mortgages. I think that low uptake partly reflects healthy caution rather than ignorance: many retirees correctly sense that unlocking equity today has a real cost tomorrow, even when the headline rate looks modest.

Where I think the conventional discussion falls short is in treating the interest rate as the main decision point. The rate matters, but the bigger variable is usually how long the loan runs and what else happens to the property in that time, aged care needs, a partner’s situation, or a planned sale. A loan that looks manageable over five years can look very different over fifteen once fortnightly compounding has had time to work.

My view: treat HEAS as a cashflow tool for a defined period, not a general‑purpose top‑up, and revisit the decision every couple of years rather than setting and forgetting it.

— Adam

How we can help you weigh up a home equity access scheme

We model Home Equity Access Scheme scenarios as part of a broader retirement income plan, checking how fortnightly payments or an advance would interact with your Age Pension, super and estate goals.

• We check your Maximum Loan Amount estimate against your retirement income needs and mortgage position.
• We factor Centrelink assets test rules into our modelling.
• We review how a HEAS loan would sit alongside your broader retirement assets and plans.

This is general information rather than personal advice, so if you want to see how the numbers play out for your situation, our retirement planning and Age Pension strategies services are a practical starting point for a tailored conversation.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

FAQ

Is the Home Equity Access Scheme a good idea?

It depends on your circumstances: the scheme offers non‑taxable income and a No Negative Equity Guarantee, but compounding interest reduces the equity left in your home over time. MoneySmart suggests considering other options, like downsizing or budgeting adjustments, before drawing on home equity.

What is the cheapest way to get equity out of your house?

There is no single cheapest option for everyone, since costs depend on your property, existing loans and how long you plan to borrow for. Government schemes like HEAS, private reverse mortgages and downsizing each carry different cost structures, so comparing your specific numbers against the HEAS interest rate and private lender rates is the practical starting point.

How do you access equity in your home in Australia?

Eligible older Australians can apply through the Home Equity Access Scheme via Services Australia or the Department of Veterans’ Affairs for veterans, or through a private reverse mortgage from a commercial lender. Each path has its own eligibility rules, so checking the official calculators first helps you compare options before applying.

How long does it take to process a Home Equity Access Scheme application?

Processing time depends on how complete your application is and how straightforward your property title and mortgage details are. Submitting accurate documents the first time, including existing mortgage statements, helps avoid the delays that come from Services Australia requesting further information.

Sources

• Home Equity Access Scheme - Services Australia
• 3.4.5.45 HEAS interest rate — Social Security Guide (DSS)
• Reverse mortgage and home equity release - MoneySmart

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• Age Pension eligibility: age, residency and the income and assets tests
• A retirement planning checklist for people approaching retirement
• Age pension assets test: July 2026 thresholds explained
• Age Pension Strategies

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here. General Advice Warning Disclaimer: The information on this website is general information only and is not intended to be a recommendation. We strongly recommend you seek advice from your financial adviser as to whether this information is appropriate to your needs & financial situation.