For many Australians, most of their retirement wealth is tied up in their home. A simple, well-designed program to tap into those trillions in home equity could help boost their retirement incomes. <\/p>\n
Such a program exists. However, it remains little known and underused.<\/p>\n
The federal government\u2019s Home Equity Access Scheme<\/a> (HEAS) allows older Australians to access their housing wealth. It is open to Australian residents aged 67 or older<\/a> who own real estate in Australia, regardless of whether they receive the age pension.<\/p>\n Similar to a reverse mortgage with a bank or specialist lender, the scheme lets older Australians supplement their retirement income through a federal government loan, secured against the equity in their home or other Australian real estate. <\/p>\n Yet government data<\/a> shows just 18,691 people are currently taking part in the scheme, a relatively low take-up.<\/p>\n A recent report from Deloitte<\/a> estimates reverse mortgages are used to access only about 1% of the A$3 trillion value of housing wealth owned by Australians aged 60 and over.<\/p>\n So, why isn\u2019t the government scheme more popular?<\/p>\n How does the scheme work?<\/p>\n Retirees can \u201ctop up\u201d any pension payment they receive up to a maximum of 150% of the maximum pension rate. People who do not receive the age pension (self-funded retirees) can receive up to the same maximum.<\/p>\n Participants can choose to receive:<\/p>\n fortnightly payments, or Compound interest is charged on the loan and accumulates over the life of the loan. This is the key difference from standard mortgage loans: people are not required to make regular repayments or interest payments (voluntary repayments can be made at any time).<\/p>\n The interest rate on the scheme is currently 3.95% and has been unchanged since January 2022. This is below the Reserve Bank\u2019s official cash rate of 4.1% and well below commercial reverse mortgages, making it relatively cheap compared with other options. <\/p>\n It was previously known as the Pension Loans Scheme<\/a> and was introduced in 1985 alongside the pension assets test.<\/p>\n Since 2019, the government has made several changes<\/a> to the scheme to make it more attractive and expand eligibility. In 2022, lump sum advances<\/a> were introduced. <\/p>\n A \u201cno negative equity guarantee\u201d was also introduced, meaning participants will never have to repay more than their home is worth, even if house prices fall.<\/p>\n How the scheme stacks up against private lenders<\/p>\n The government scheme shares many similarities with reverse mortgages offered by some banks and specialist lenders. <\/p>\n In both cases, the payments received are added to a loan that increases over time with interest. The loan is usually repaid when the home is sold, or from the estate after the borrower dies.<\/p>\n Voluntary repayments can be made at any time, but are not required. <\/p>\n Both commercial reverse mortgages and the government scheme offer regular or lump-sum payments, and include protections such as the no negative equity guarantee. <\/p>\n The payments have no impact on age pension payments if the loan is taken as a regular income stream to spend on living expenses or non-assessable assets.<\/p>\n The main differences are: <\/p>\n under the government scheme, the payments are capped at 150% of the maximum age pension rate, whereas the commercial reverse mortgages can offer higher borrowing amounts. Why such a low take-up rate?<\/p>\n Government data on its scheme shows the average loan amount was about $35,700 in December 2025. Of those taking part, 74% received the full age pension, 17% received a part pension, and 5% were self-funded retirees. <\/p>\n But with only 18,691 people taking part, take-up is still low.<\/p>\n As a government program, the scheme is not widely advertised. So it is good to see more superannuation funds<\/a> providing their members with information<\/a> about the scheme.<\/p>\n Some financial advisers may be unsure whether they can advise on the scheme. In January 2023<\/a>, the Australian Securities and Investments Commission (ASIC) clarified that financial advisers can provide advice on the government scheme without needing an Australian Credit Licence.<\/p>\n Behavioural factors, such as debt aversion and a preference to leave the home as an inheritance, may also explain the low take-up rate. The loan will be repaid out of the sale of the home, meaning proceeds from the sale will be reduced.<\/p>\n
\na lump sum advance.<\/p>\n
\nbut banks and specialist lenders charge a higher interest rate on reverse mortgages, currently 8\u20139% per year<\/a>, due to higher risks and market-based pricing. <\/p>\n