What is the Home Equity Access Scheme?

Retirement is something we all think about and plan for and if you’re approaching this chapter of your life, sorting out your financial situation is important. Additionally, if you’re lucky enough to have paid off your home, there are government schemes in place like the Home Equity Access Scheme, designed to help fund your retirement.

What is the Home Equity Access Scheme?

The Home Equity Access Scheme (HEAS) is a government scheme for older Australians who’ve reached pension age, own property and are looking to boost their retirement income. How it works is the Department of Veterans’ Affairs (DVA) use your property as security to offer a voluntary loan that’s made up of non-taxable, fortnightly payments up to 150% of the rate of the Age Pension. Essentially, eligible participants can use the equity in their property to qualify for the loan and participants can choose how long they’d like to receive loan payments; either short or long term, or they can pay back in full.

Who is eligible for the Home Equity Access Scheme?

To be eligible, you must meet the following criteria:

• You or your partner are of pension age or older.
• Obtain or be eligible to receive:
  • Age pension
  • Carer payment
  • Disability support pension
• You or your partner own real estate in Australia which is eligible to use as security for the loan.
• Have suitable real estate insurance on the property used as security for the scheme.
• Not bankrupt or subject to a personal insolvency agreement.

To find out if you’re eligible for this scheme, the government have provided this online tool.

How does the Home Equity Access Scheme work?

You’ll receive an income (in the form of a loan) based on the value of your property, how much equity you choose to offer as security and whether or not you already receive a pension. You can choose to receive this supplementary income fortnightly, as a lump sum advance payment, or a combination of both.

You can repay the loan in part or full at any time, plus costs and any interest accrued. The scheme interest rate is set by the government and is published in the Australian Government Gazette. As of October 2022, the interest rate is 3.95% p.a. The loan will continue to incur interest each fortnight until it is repaid in full.

You’re not expected to repay the loan until you decide to exit this scheme, which you can do at any time. You’ll receive income until your total loan balance reaches your maximum loan amount, including interest and other costs.

If you or your partners dies, the government will recover the remaining loan from your estate. However, your surviving partner can decide to stay in the scheme and any payments will go to them. If your surviving partner decides to exit the scheme, repayments won’t be charged until that partner dies or sells the secured property.

How to apply for the Home Equity Access Scheme

We hope this article has helped you better understand the Home Equity Access Scheme and if it’s something you’re interested in pursuing, we recommend seeking financial/legal advice before making a decision. To find out more or apply, click here and follow the appropriate links.

This article does not provide financial advice. Consider all options available to you, seek professional guidance and only choose an option you are comfortable with

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