The Home Equity Access Scheme: a government reverse mortgage worth knowing about

A common situation for Australian retirees is being asset-rich and cash-poor. The family home — often paid off and substantially appreciated over decades — represents most of the household's wealth but generates no income. Selling it is a significant decision involving more than just money. For Australians in this situation, the Home Equity Access Scheme — known as HEAS — offers a way to draw on home equity without selling. It is administered by Services Australia, was formerly known as the Pension Loans Scheme, and was substantially expanded in 2022. It remains one of the less widely-known features of Australia's retirement income system.

HEAS is, in plain terms, a government-run reverse mortgage. You borrow against the equity in your home or other Australian real estate, and receive the loan as fortnightly payments, lump sums, or a combination. The loan accrues interest and is repaid when you eventually sell the property, move out permanently, or after you die. You can also make voluntary repayments at any time without penalty if your financial position improves.

To be eligible, you must have reached Age Pension age — currently 67 for anyone born on or after 1 January 1957 (DSS Social Security Guide section 3.4.1.10, guides.dss.gov.au/social-security-guide/3/4/1/10, Guide version 1.338, 20 March 2026) — and either receive an Australian government pension (Age Pension, Disability Support Pension, or Carer Payment), or qualify for the maximum pension rate but receive zero because of the means tests. You must also own Australian real estate of sufficient value to secure the loan and have adequate insurance on the property. One point worth emphasising: HEAS is not limited to Age Pension recipients. Self-funded retirees of Age Pension age who own their home and would otherwise qualify for the pension are eligible too. Many self-funded retirees assume HEAS is "for pensioners" and overlook an option they can access.

What is the current HEAS interest rate?

The government-set interest rate on HEAS loans is 3.95% per annum, compounded fortnightly — and has been unchanged for over three years (Services Australia, https://www.servicesaustralia.gov.au/interest-rate-for-loans-under-home-equity-access-scheme). This rate is well below what commercial reverse mortgage providers typically charge — often half or less of the commercial rate. For a borrower who holds a HEAS loan for ten years, the difference in interest accrual between a 3.95% and a 7% rate on a $100,000 drawn balance is material — the cumulative interest difference exceeds the original principal.

What are the HEAS payment caps and lump sum advance limits?

The amount accessible through HEAS is capped (Services Australia, https://www.servicesaustralia.gov.au/how-much-you-can-get-under-home-equity-access-scheme; DSS Guide 3.4.5.40):

• Fortnightly payments: combined Age Pension plus HEAS payments cannot exceed 150% of the maximum fortnightly Age Pension rate (including pension supplement, Energy Supplement, and Rent Assistance where applicable). A full pensioner can top up their pension by 50% of the max rate; a self-funded retiree with no pension can receive up to the full 150%.
• Lump sum advances: under the 2022 expansion, participants can take up to 2 lump sum advances in a 26-fortnight (annual) period. The combined total is capped at 50% of the maximum annual rate of pension (including supplements where applicable). Taking lump sums reduces fortnightly HEAS payment capacity for the following 26-fortnight period.

The 150% combined cap means even high-asset retirees can use HEAS for meaningful supplementation — at the current single max pension rate of $1,200.90/fortnight (FY2025-26 from 20 March 2026), the 150% ceiling translates to approximately $1,801/fortnight = ~$46,830/year of combined Age Pension + HEAS for a single full-pensioner equivalent. For a self-funded retiree with no Age Pension, the full 150% is HEAS-funded.

HEAS payments are not counted as income for the Age Pension income test. Because the payments are loan advances rather than income, a part-pension recipient using HEAS to top up their fortnightly cash flow does not have their pension reduced as a result. The loan itself does not add to assessable assets — the property value securing it is already excluded as the principal home, and the cash received is typically consumed as it arrives. For retirees who want to maintain their lifestyle without triggering an income test reduction, this is one of HEAS's most practically useful features.

One significant protection introduced with the 2022 reforms is the No Negative Equity Guarantee. This means that if your loan balance ever exceeds the value of the property securing it — because you live longer than modelled, or because the property value falls — neither you nor your estate is liable for the shortfall. The government bears that risk. Your family will not be left with a debt exceeding the secured property's value to settle from other estate assets.

For any retiree who has been approached by a commercial reverse mortgage provider, a direct comparison with HEAS is worthwhile before signing anything. The lower interest rate alone makes HEAS the cheaper option for almost anyone who qualifies. Where larger amounts are needed than HEAS allows, commercial products may have a role — but the comparison should be done first.

How does a self-funded retiree use HEAS to supplement income?

Consider Margaret, 73, single, self-funded retiree. Her assets total $1.6M (above the Age Pension cut-off so she receives no Age Pension), comprising her $950,000 home, $580,000 in account-based pension, and $70,000 in cash. Her ABP drawdowns at 5% minimum = ~$29,000/year. She'd like another $25,000/year of cashflow without exhausting her ABP faster than necessary.

She applies for HEAS as a self-funded retiree (Age Pension age met, owns property, no Age Pension received but would qualify for max rate by means tests at zero income). Her ceiling: 150% of max single Age Pension = ~$1,801/fortnight = ~$46,830/year. She elects to draw $25,000/year from HEAS = $961/fortnight — well under the ceiling.

Year-1 HEAS balance accrual: $25,000 drawn + ~3.95% interest on a slowly-rising average balance ≈ ~$25,500 owed at end of year 1. Year 10 balance approximately $300,000 (depending on actual draw schedule and compounding) — well below the No Negative Equity Guarantee threshold given her $950k home and modest property appreciation.

The HEAS payments are not income for Age Pension test purposes. The loan does not add to her assessable assets. Her ABP is preserved at higher balance, providing more headroom for irregular needs (medical, travel, gifts to grandchildren). When she eventually moves to aged care or passes away, the home is sold and the loan repaid from sale proceeds — net of repayment, the residual flows to her estate.

How does a full Age Pension recipient use HEAS to top up to 150%?

Consider David, 79, single, on full Age Pension. His assets are below the threshold so he receives the maximum: $1,200.90/fortnight = ~$31,223/year. His weekly budget is tight, particularly for medical out-of-pockets after his GP visits stopped being bulk-billed.

He activates HEAS to top up to the 150% ceiling: max combined = ~$1,801/fortnight. The HEAS portion = $1,801 - $1,200.90 = $600.10/fortnight = ~$15,600/year of additional cashflow.

His Age Pension is unaffected (HEAS payments aren't income for the pension test). His daily quality of life improves — he can afford private GP gaps, travel to see his grandchildren interstate twice a year, and replace household items as needed without dipping into his $30k cash reserve.

Cumulative HEAS over 10 years (his late 80s): ~$170-190k owed (with interest compounding). His home is worth ~$680k. Even with modest property appreciation, the No Negative Equity Guarantee comfortably protects his estate. When he eventually passes, the home is sold, HEAS repaid from sale proceeds, residual flows to his children. He gets a meaningfully better last decade in exchange for a reduction in inheritance. For most retirees in David's position, that's a defensible trade-off — and it's one his children would generally support if asked.

Sources

• DSS Social Security Guide
• Services Australia — Home equity access scheme
• Services Australia — Interest rate for loans under home equity access scheme
• Services Australia — How much you can get under home equity access scheme
• Services Australia — Home equity access scheme advance payments
• DSS Social Security Guide