A retired couple in their mid seventies own their home outright. It is worth around $900,000. They receive the full Age Pension, they have about $40,000 left in super, and they are managing, just. Then the hot water system goes, the car needs replacing, and one of them needs dental work that Medicare does not cover.
The advice they usually receive is to sell and downsize, or to look at a reverse mortgage from a bank. Both are reasonable options and both are significant decisions. What is rarely mentioned is that there is a third one, run by the Australian Government, that has existed in some form since 1985 and that most retirees have never heard of.
It is called the Home Equity Access Scheme. It lets people of Age Pension age borrow against Australian property they own, receive the money as a fortnightly payment or a lump sum, and repay it when the property is sold or from their estate. The interest rate has been 3.95 per cent per annum since January 2022, which is roughly half what commercial reverse mortgages charge.
Take up has historically been low, and the main reason is simply that people do not know it exists. This guide explains how it works, who can use it, what it costs over time, and the situations where it genuinely helps rather than just delaying a harder decision.
What the scheme actually is
The Home Equity Access Scheme is a voluntary loan from the Australian Government, secured against real estate you own in Australia. It was previously called the Pension Loans Scheme and was renamed on 1 January 2022, which is one reason older articles and older advice can be hard to match up with current information.
The mechanics are straightforward:
- You nominate Australian real estate you own or co-own as security. It does not have to be the home you live in.
- You choose to receive the money as a fortnightly payment, as up to two lump sum advances in any 26 fortnight period, or a combination of both.
- Compound interest accrues fortnightly on the balance you have actually drawn, not on the total you are entitled to.
- You can vary the amount, stop payments, or repay early at any time without penalty.
- The loan is repaid when the property is sold, or from your estate.
- A no negative equity guarantee applies, so you cannot end up owing more than the value of the property.
It is administered by Services Australia, or by the Department of Veterans’ Affairs for veterans.
The biggest misconception: you do not need to be on the Age Pension
Most people who have heard of the scheme assume it is only for pensioners. It is not, and this is the single most useful thing to know about it.
The scheme is available to people of Age Pension age who own Australian real estate and meet the residency and other requirements, whether or not they receive a pension. A self funded retiree who fails the assets test entirely can still use it. In fact they can access the largest fortnightly amount, because the cap works as a top up.
That opens it to a group who are frequently asset rich and cash constrained: retirees with a valuable home, modest super, and no pension entitlement, who feel they have to sell in order to access anything. Our guide on how the Age Pension income and assets test works explains why that group is larger than people assume.
How much you can receive
The fortnightly payment
The rule is that your pension plus your loan payment together cannot exceed 150 per cent of the maximum rate of Age Pension. The loan tops you up to that ceiling.
| Your situation | Loan payment available |
|---|---|
| Receiving the maximum rate of pension | Up to a further 50% of the maximum rate |
| Receiving a part pension | The difference between your pension and 150% of the maximum rate |
| Receiving no pension | The full 150% of the maximum rate |
To put approximate numbers on it using the rates applying in the first half of 2026, 150 per cent of the maximum single rate is around $1,800 per fortnight, and around $2,715 per fortnight for a couple combined. A single full rate pensioner could therefore access roughly $600 a fortnight, and a self funded single retiree could access the whole $1,800.
These amounts are indexed twice a year, on 20 March and 20 September, so check the current figures with Services Australia rather than relying on any published number, including these ones.
Lump sum advances
Since mid 2022 you have also been able to take lump sum advances, which is what makes the scheme practical for one off costs rather than only for income support. You can take up to two advances in any 26 fortnight period, to a combined total of no more than 50 per cent of the maximum annual rate of Age Pension. On the rates applying in the first half of 2026 that is roughly $15,600 for a single person and around $23,500 for a couple.
The trade off is that taking an advance reduces the fortnightly amount available to you over the following 26 fortnights. You are not getting extra money, you are getting the same money sooner.
The maximum loan balance
Separately from how much you can draw each fortnight, there is a ceiling on the total balance the loan can reach, including accrued interest. It is calculated from two things: your age, or the age of the younger member of a couple, and the value of the security property net of any existing mortgage.
The ceiling rises each year as you get older, because the expected term of the loan shortens. Services Australia publishes a calculator that will give you your figure, and it is worth running before you form a view, because the answer surprises people in both directions.
The interest rate is the whole story
The scheme charges 3.95 per cent per annum, compounding fortnightly. That rate has been unchanged since 1 January 2022. Commercial reverse mortgages in Australia have generally sat well above it.
Over a long period, the difference is not marginal. Assume someone draws $500 a fortnight and compare the scheme rate against a commercial rate of 7.5 per cent.
| Period | Total drawn | Balance at 3.95% | Balance at 7.5% | Difference |
|---|---|---|---|---|
| 5 years | $65,000 | $71,912 | $78,956 | $7,044 |
| 10 years | $130,000 | $159,513 | $193,775 | $34,262 |
| 15 years | $195,000 | $266,226 | $360,745 | $94,518 |
Two things stand out. The rate advantage compounds into real money, close to $95,000 over fifteen years on these assumptions. And the balance grows substantially either way. After fifteen years of drawing $500 a fortnight, this borrower has received $195,000 and owes $266,226. That is not a criticism of the scheme. It is what borrowing against an asset and not servicing the interest does, and anyone considering it should look at that second column squarely.
Figures are illustrative and assume the current rate continues, which is not guaranteed. The rate is set by government and can be changed.
The no negative equity guarantee
Since 1 January 2022 the scheme has carried a no negative equity guarantee. In plain terms, you cannot be asked to repay more than the value of the property securing the loan, even if the balance has grown past it.
This matters most for people who live a long time and draw for many years, and it is the protection that makes the arithmetic above tolerable. It also matters to adult children, who often raise the fear that a parent could end up owing more than the house is worth. Under this scheme they cannot.
What it does to your pension and your tax
Loan payments under the scheme are not taxable income, and they are not assessed as income for the Age Pension income test. Drawing on the scheme therefore does not reduce your pension.
The asset position is worth thinking about separately. The loan creates a debt secured against the property. For most homeowners the family home is already an exempt asset for the pension assets test, so nothing changes there. Where the security property is not your home, or where you are approaching an aged care assessment, the interactions become more involved and are worth checking specifically rather than assuming. Our guides on deeming rates and means tested care fees in aged care cover the surrounding rules.
One point that catches people: money you draw and then leave sitting in a bank account becomes an assessable financial asset and is subject to deeming. Drawing large amounts you do not need can therefore affect your pension even though the payments themselves do not.
Where it genuinely fits
Bridging to a downsize you are not ready for
Selling the family home is a major decision and often the right one, but the timing is rarely dictated by the household budget. The scheme can fund a few years of shortfall while a move happens on your terms rather than under pressure.
Funding care at home
Home care contributions, home modifications, and privately purchased support all cost money that the pension does not stretch to, and they are exactly the costs that let someone stay in the house they are borrowing against. Our guides on aged care at home and what aged care really costs set out the numbers involved.
One off costs that would otherwise wreck a year
A roof, a car, dental work, a funeral. The lump sum advance facility exists for precisely this, and it is a better answer than a credit card or a personal loan at pension age.
A mortgage still owing at retirement
An increasing number of Australians reach Age Pension age still carrying home loan debt. The scheme is one of several levers here, though not always the right one, and an existing mortgage can complicate taking a second charge over the property. Our guide on retiring with a mortgage still owing works through the alternatives.
Protecting a portfolio in a bad year
Drawing heavily from investments after a market fall does lasting damage to a retirement portfolio. A period of scheme drawings, used deliberately to reduce portfolio withdrawals while markets recover, is one way to manage that. It is a technique worth understanding alongside building a sustainable retirement income.
The honest downsides
- It is debt, and it compounds. Nothing is being repaid along the way. The balance grows every fortnight, and it grows faster the longer you live, which is the opposite of how most people think about longevity.
- It reduces what you leave behind. For many retirees this is entirely acceptable, and using your own home to fund your own retirement is a legitimate choice. It still deserves an explicit conversation rather than a discovery by the executor. Our guide on estate planning covers how to record intentions properly.
- An existing mortgage can block it. A mortgage does not automatically disqualify you, but many loan contracts prevent a further charge being registered, so your existing lender needs to be consulted early.
- The property must be suitable and insured. You need to be on the title, and adequate building insurance must be maintained for the life of the loan.
- It is not a substitute for income. If the shortfall is structural and permanent, the scheme delays rather than solves it, and the delay costs compounding interest. Our guide on what happens if you run out of money in retirement is the harder conversation that sometimes needs to come first.
- Family expectations. Where adult children are anticipating an inheritance, or have contributed to the property, this needs to be discussed rather than assumed either way. It sits alongside the questions raised in helping your kids buy a home without risking your retirement.
How it compares to a commercial reverse mortgage
| Home Equity Access Scheme | Commercial reverse mortgage | |
|---|---|---|
| Interest rate | 3.95% since January 2022, set by government | Typically materially higher, set by the lender |
| How you receive it | Fortnightly, or up to two advances per 26 fortnights | Usually lump sum, line of credit or income stream |
| Amount available | Capped at 150% of the maximum pension rate, plus a total balance ceiling | Generally a larger single drawdown, subject to lender limits |
| No negative equity guarantee | Yes | Yes, required by law for post-2012 contracts |
| Flexibility | Stop, start, vary or repay at any time | Varies by product, early repayment costs possible |
The scheme is cheaper and more flexible. The commercial products generally allow larger amounts, which is why they still have a role where a big one off sum is genuinely required. For regular income top up, the scheme is usually the better starting point, and it is the one to rule out first rather than last.
Where Professional Advice Adds Value
The scheme is not complicated to apply for. What is difficult is deciding whether it should be used at all, and if so, how much and for how long, because those choices compound quietly for the rest of your life.
At Money Path the work usually involves four things. Establishing whether the shortfall is temporary or structural, because the right answer differs completely. Modelling the loan balance against likely property values over a realistic time horizon rather than a hopeful one. Comparing it properly against the alternatives, including downsizing, drawing more from super, and doing nothing. And helping to have the family conversation, which is often the part people put off longest and regret most.
We also see the opposite error. Retirees who deny themselves dental work, heating or a decent car while sitting on eight hundred thousand dollars of housing equity, because using it feels like failure. It is not. The purpose of a lifetime of saving is to fund your life, and our guide on taking control of funding your retirement starts from that position.
Frequently asked questions
Do I have to be receiving the Age Pension to use the Home Equity Access Scheme?
No. The scheme is open to people of Age Pension age who own Australian real estate and meet the residency and other requirements, whether or not they receive a pension. Self funded retirees can access the largest fortnightly amount, because the payment tops you up to 150 per cent of the maximum pension rate and they have no pension being counted against that ceiling.
What is the interest rate and can it change?
The rate has been 3.95 per cent per annum, compounding fortnightly, since 1 January 2022. It is set by government and can be changed, so check the current rate with Services Australia before making a decision. Interest accrues only on what you have actually drawn, not on the total you are entitled to.
Will it reduce my Age Pension?
The loan payments themselves are not taxable and are not assessed as income for the pension income test, so drawing on the scheme does not reduce your pension. However, money you draw and leave in a bank account becomes an assessable financial asset subject to deeming, which can affect your entitlement.
Can I take a lump sum instead of fortnightly payments?
Yes. You can take up to two advances in any 26 fortnight period, to a combined total of no more than 50 per cent of the maximum annual rate of Age Pension. Taking an advance reduces the fortnightly amount available to you over the following 26 fortnights.
Could I end up owing more than my house is worth?
No. A no negative equity guarantee applies, so the amount repayable cannot exceed the value of the property securing the loan. The balance can still grow substantially over a long loan, which reduces what is left for your estate, but it cannot exceed the property value.
Can I use it if I still have a mortgage?
Possibly. An existing mortgage does not automatically disqualify you, but many loan contracts prevent a further charge being registered over the property, so you need to check with your existing lender first. Any existing debt also reduces the net property value used to work out your maximum loan.
How is the loan repaid?
It is repaid when the property is sold or from your estate, along with accrued interest and costs. You can also repay in full or in part at any time, without penalty, and you can stop drawing at any point while leaving the existing balance outstanding.
Taking the next step
If you own your home and money is tighter than it should be, this is worth half an hour of your time before any bigger decision is made. Services Australia publishes a calculator that will tell you your maximum loan amount, and knowing that number changes the shape of every other conversation about downsizing, drawdown and care.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs. Payment rates and thresholds referred to are indexed twice yearly and were current at the time of writing, so confirm current figures with Services Australia before acting. The Home Equity Access Scheme creates a debt secured against your property that accrues compound interest and reduces the value of your estate. You should consider whether the information is appropriate for you and seek personal advice from a licensed financial adviser, and consider speaking with a Services Australia Financial Information Service officer, before applying.
