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How the Home Equity Access Scheme works (formerly Pension Loan Scheme)

Janine Mace

Cost-of-living pressures and inflation are making life difficult for everyone and retirees are not immune.

The ASFA Retirement Standard September quarter 2023 figures show couples aged around 65 need to spend a record high of $71,124 per year to live a ‘comfortable’ retirement.

The annual increase in expenditure needed by singles rose 5.5% to $50,981 during the September quarter.

With their budgets under sustained pressure for the past two years and significant relief unlikely any time soon, retirees may need to look for new ways to boost their retirement income. One solution could be the federal government’s Home Equity Access Scheme.

Need to know

The Home Equity Access Scheme (HEAS) was originally called the Pension Loan Scheme (PLS) but was rebranded as HEAS in December 2021.

In the past year, the number of retirees taking out HEAS loans has increased strongly. During 2022–23, the Department of Social Services held HEAS loans worth $238 million, up from $141 million the previous year.

What is the Home Equity Access Scheme?

The HEAS is a reverse-mortgage-style loan offered by the federal government that allows borrowers of Age Pension age to receive a tax-free fortnightly income stream by taking out a loan against the equity in their home.

Since 1 July 2022, borrowers are also able to withdraw lump sum advances.

Good to know

A reverse mortgage works a little like a home loan in reverse. It’s a loan that allows you to borrow money against the equity (or value of a property less any mortgage debt) you have in your home.

Borrowers are required to pay interest on the loan, but regular repayments are not required. Instead, interest is added to the loan amount. You can remain in your home until it is sold, usually on your death.

Learn about reverse mortgages.

Watch our video showing the impact of taking out a HEAS or reverse mortgage loan.

How does the Home Equity Access Scheme work?

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About the author

Janine Mace
Janine has over 25 years’ experience writing about superannuation, including a decade as Managing Editor of the ASFA’s highly respected industry magazine, SuperFunds. She has worked with a range of super funds and leading institutional investment managers. Her work has appeared in the Australian Financial Review personal finance section and she has been a regular contributor to Money Management and Financial Planning magazines.
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Response

  1. Anthony Snape Avatar
    Anthony Snape

    The PLS is a good scheme if used wisely. A problem arises if you wish to make regular repayments to control the balance. In my case I have found a financial institution that issues fee free bank cheques (currently you can only repay by bank cheque or money order) but nowhere on Centrelink’s websites is there any information about who to make the cheque out to, where to send it, how long it will take to be credited or how to check the account balance.
    Why is this? (Answer : follow the money!).

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