The Centrelink Home Equity Access Scheme (HEAS) provides a secure, government-backed way for eligible Australian seniors to access home equity and boost retirement income.
With flexible payment options, competitive interest rates, and protections like the No Negative Equity Guarantee, the HEAS is an attractive alternative to private reverse mortgages.
This guide covers everything you need to know about the scheme, from benefits and eligibility to application steps.
Centrelink Home Equity Access Scheme
The HEAS allows seniors to supplement their retirement income by tapping into their home equity.
Whether you need regular payments or a lump sum, this scheme offers flexible options while letting you retain ownership of your property.
| Aspect | Details |
|---|---|
| Purpose | Boost retirement income by accessing home equity |
| Eligibility | Age Pension age, Australian resident, property ownership |
| Payment Options | Fortnightly payments (up to 150% of Age Pension), lump sum advances |
| Interest Rate | 3.95% per annum, compounding fortnightly |
| Repayment | Upon sale of property or from the estate; voluntary repayments allowed |
Key Benefits of the HEAS
- Boost Income: Provides additional financial resources during retirement.
- Retain Home Ownership: You remain the owner of your home while accessing its equity.
- Flexible Payment Options: Choose between fortnightly payments, lump sums, or a combination.
- Government-Backed Security: Enjoy regulated terms and protections.
- No Negative Equity Guarantee: Ensures you or your estate won’t owe more than the property’s value.
Eligibility Criteria
To qualify for the HEAS, you must meet the following requirements:
1. Age
- You must be of Age Pension age (66+ or 67+, depending on your birth year).
2. Residency
- Be an Australian resident or citizen.
3. Property Ownership
- Own or co-own Australian real estate to use as security for the loan.
4. Financial Standing
- Must not be bankrupt or under a personal insolvency agreement.
Note: Even if you do not receive an Age Pension, you may still qualify if you meet the above criteria.
Payment Options
The HEAS offers two primary payment methods to suit different financial needs:
1. Fortnightly Payments
- Maximum: Up to 150% of the maximum Age Pension rate, including supplements.
- Example:
If the maximum Age Pension for singles is $1,144.40 per fortnight, HEAS payments can increase this to $1,716.60 per fortnight.
2. Lump Sum Advances
- Maximum: Up to 50% of the annual Age Pension rate, with a limit of two advances within 26 fortnights.
- Example:
If the maximum annual Age Pension is $29,754.40, you can receive up to $14,877.20 as a lump sum advance.
These options provide flexibility, allowing you to customize your income based on immediate or ongoing needs.
Interest Rate and Repayment Terms
- Interest Rate: 3.95% per annum, compounding fortnightly.
- Repayment:
- Typically occurs when the property is sold or from your estate.
- Voluntary repayments can be made at any time without penalties.
No Negative Equity Guarantee
This crucial feature ensures you or your estate will never owe more than the property’s market value, providing peace of mind for you and your beneficiaries.
Impact on Other Benefits
Since HEAS payments count as income, they may affect your eligibility for other income-tested benefits, such as the Age Pension.
It’s advisable to consult Services Australia or a financial advisor to understand how HEAS payments might influence your overall benefits.
Comparison: HEAS vs. Reverse Mortgages
| Aspect | HEAS | Reverse Mortgage |
|---|---|---|
| Interest Rate | 3.95% (government-backed) | Varies; typically higher rates |
| No Negative Equity | Guaranteed | Not always guaranteed |
| Repayment Flexibility | Typically upon sale or from estate | Often required upon moving or sale |
| Eligibility | Age Pension age; property ownership | Varies by lender |
The HEAS offers a secure, low-interest option compared to private reverse mortgages, making it an appealing choice for many retirees.
Pros and Cons of the HEAS
Advantages
- Government-backed with lower interest rates.
- Flexible payments (fortnightly or lump sum).
- No Negative Equity Guarantee protects estates.
Disadvantages
- Accrued interest can reduce home equity over time.
- Payments may affect eligibility for other benefits.
- Requires securing the loan against your property.
Examples of HEAS in Practice
- Fortnightly Payments:
A retiree supplements their small Age Pension with $1,716.60 per fortnight, providing extra cash for living expenses. - Lump Sum Advance:
A couple uses $14,877.20 from their home equity to fund essential home renovations.
Common Mistakes to Avoid
- Over-Borrowing: Borrowing the maximum allowable amount can lead to substantial interest accrual.
- Ignoring Benefit Impacts: HEAS payments may reduce other income-tested benefits.
- Skipping Professional Advice: Consult a financial advisor to understand how the HEAS fits into your overall strategy.
How to Apply for the HEAS
Follow these steps to access the scheme:
Step 1: Confirm Eligibility
- Check if you meet the age, residency, and property ownership requirements.
Step 2: Gather Documentation
- Required documents include:
- Proof of identity and property ownership.
- Personal financial information (e.g., income, assets).
Step 3: Use the HEAS Calculator
- Estimate your loan amount and interest using the HEAS calculator on the Services Australia website.
Step 4: Submit an Application
- Online: Apply through your myGov account.
- In-Person: Visit a local Services Australia service centre.
Step 5: Select Payment Options
- Choose between fortnightly payments, lump sum advances, or both.
The Home Equity Access Scheme (HEAS) offers a flexible, government-backed solution for seniors looking to boost their retirement income.
With secure terms, low interest rates, and the No Negative Equity Guarantee, it’s a compelling alternative to private reverse mortgages.
However, understanding its impact on other benefits and long-term finances is essential.
For personalized advice, consult a financial advisor or visit the Services Australia HEAS page.
