For many older Australians, the family home is by far their largest financial asset.
Yet it is also an unusual asset.
You may own a home worth $1 million, $1.5 million or more and still depend heavily on the Age Pension for day-to-day living expenses. At the same time, rising costs for home maintenance, healthcare, renovations and support can leave retirees feeling “asset rich but cash poor”.
That is why the latest Centrelink and aged care changes matter.
In 2026, there have been important changes to Age Pension asset thresholds, alongside further changes to the Australian Government’s Support at Home aged care program.
For homeowners considering a Reverse Mortgage or other form of home equity release, understanding how these systems interact is particularly important.
The key point is this:
Your principal home is generally exempt from the Age Pension assets test, but money released from your home may be treated differently once it is held as cash or converted into another assessable asset.
So before releasing home equity, it is worth thinking carefully about how much you need, when you need it and what you intend to do with the money.
Here is what older homeowners need to know in 2026.
1. The July 2026 Centrelink asset limits: where do you stand?
Centrelink uses both an income test and an assets test when determining Age Pension eligibility and payment rates.
From 1 July 2026, the Services Australia Age Pension assets test thresholds for homeowners are:
| Your situation | Assets for full pension | Pension cuts out above |
| Single homeowner | $333,000 | $733,500 |
| Couple homeowners – combined | $499,000 | $1,102,500 |
If your assessable assets exceed the full-pension threshold, your pension progressively reduces. Once your assets exceed the relevant upper cut-off, you generally cease to qualify for the Age Pension under the assets test.
Centrelink also applies an Age Pension income test, with the test producing the lower pension entitlement generally determining the amount you receive.
Different thresholds can apply to non-homeowners, couples separated due to illness, people receiving transitional pension rates and some other circumstances.
Why the family home matters so much
For many retirees, one of the most valuable features of the Australian retirement system is that your principal home is generally excluded from the Age Pension assets test.
Services Australia confirms that the principal home, generally including up to the first two hectares of land it sits on, is not treated like other real estate for the assets test.
Consider a hypothetical retired couple who own a $1.4 million home but have considerably less wealth outside the property.
Their home itself may not count towards the normal Age Pension assets limit. This creates a very different situation from having $1.4 million sitting in cash, shares or investment property.
It also explains why home equity can potentially play such an important role in retirement funding.
A Reverse Mortgage allows an eligible older homeowner to access part of that home equity without having to sell the property.
But there is an important issue to understand before doing so.
2. Releasing money from your home can change the Centrelink equation
A common misconception is that because the family home is exempt from Centrelink’s assets test, any money borrowed against the home must also remain exempt.
It is not necessarily that simple.
Centrelink assesses financial assets such as money held in bank accounts and investments. How released home equity affects your entitlement can therefore depend on what happens to the money after it is borrowed.
The Government’s own Home Equity Access Scheme illustrates this distinction. Under the scheme, an advance secured against a principal home receives a specific 90-day exemption from the assets test, after which Services Australia can record the advance as a financial investment.
Commercial reverse mortgages are different products, so borrowers should obtain advice about their particular circumstances rather than assuming identical treatment.
The broader principle, however, is important: what you do with released funds can matter.
There can be a substantial difference between drawing money to meet an immediate expense and borrowing a much larger amount that remains sitting in a bank account.
A simple example
Imagine John and Margaret are homeowners receiving the Age Pension and have $460,000 of assessable assets.
That puts them below the $499,000 full-pension homeowner threshold for a couple from 1 July 2026.
They believe they may need another $60,000 over the next few years for home repairs, medical expenses and extra help around the house.
Rather than automatically drawing the entire $60,000 on day one, they could investigate whether a structure involving a smaller initial amount and further funds later might better suit their needs.
This is potentially important for Centrelink purposes, but it can be even more important because of compound interest.
With a Reverse Mortgage, interest is generally added to the outstanding loan rather than requiring compulsory monthly repayments. The larger the amount borrowed, and the longer it remains outstanding, the greater the potential accumulated interest.
ASIC’s MoneySmart Reverse Mortgage Calculator demonstrates how a reverse mortgage balance can grow over time and how that may affect the equity remaining in the property.
This is why at Seniors First we place particular emphasis on loan structure, not simply the maximum amount a lender is prepared to provide.
Our Home EquiSaver™ approach is designed around accessing funds progressively where appropriate, rather than automatically drawing the entire required facility upfront.
3. Support at Home: what has changed in 2026?
Australia’s aged care system is also undergoing major reform.
The Support at Home program commenced on 1 November 2025, replacing the former Home Care Packages Program and Short-Term Restorative Care Programme. The Commonwealth Home Support Programme is continuing separately for now, with its transition to Support at Home deferred until no earlier than July 2027.
Support at Home is designed to help older Australians receive care and support while continuing to live independently at home.
Under the current contribution arrangements, the amount a participant pays depends partly on the type of service being provided and, for some services, their financial circumstances.
Clinical supports are fully government funded, while contribution arrangements apply to relevant independence and everyday living services. You can see the current rules on the Government’s Support at Home participant contributions page.
For homeowners thinking about the financial side of remaining at home or eventually entering residential care, Seniors First also has further information about aged care finance options.
4. From 1 October 2026, personal care becomes fully government funded
Another important change is scheduled for 1 October 2026.
From that date, personal care services under Support at Home will move into the Clinical Supports contribution category.
The Australian Government says this means participants approved for personal care in their support plan will be able to receive those services without an out-of-pocket participant contribution, subject to their available Support at Home funding.
This can include help with important daily activities such as showering, dressing, mobility and personal hygiene.
For many older Australians trying to remain in their own homes for longer, that is a significant improvement.
However, it does not mean every cost associated with ageing at home will be paid by the Government.
Property repairs, larger renovations, accessibility improvements and other expenses can still create funding gaps.
And that is where understanding the interaction between government assistance, personal savings and home equity becomes valuable.
5. What happened to the proposed July 2026 Support at Home price caps?
Earlier plans for Support at Home included government-set service price caps from 1 July 2026.
However, the policy changed.
On 20 May 2026, the Australian Government announced that it would pause implementation of the proposed Support at Home price caps while introducing additional consumer protections.
Providers currently continue to set prices, but pricing must meet applicable requirements around reasonableness and transparency, and the Government and Aged Care Quality and Safety Commission are monitoring what providers charge.
For older consumers and their families, the practical lesson is straightforward:
Do not assume every provider charges the same amount.
Compare providers, ask exactly what is included in the quoted service price and review your statements carefully.
6. Support at Home can help with home modifications — but there are limits
One particularly useful part of Support at Home is the Assistive Technology and Home Modifications scheme, known as AT-HM.
The scheme provides separate needs-based funding to help eligible older Australians obtain equipment or make changes to their homes that support safety and independence.
Government funding classifications currently include $500 for the low tier, $2,000 for the medium tier and $15,000 for the high tier, with more than $15,000 potentially available for assistive technology in some cases where assessed needs justify it.
For many people, this assistance can make a meaningful difference.
However, anyone who has recently priced a substantial bathroom conversion, accessibility renovation or major structural work will know that the total cost can easily exceed the government assistance available.
Imagine, for example, that a homeowner needs $35,000 of modifications to make their property safer and easier to live in.
Government assistance may cover some eligible work, but they could still face a significant private funding gap.
Some retirees can comfortably pay that difference from savings or superannuation.
Others may be reluctant to run down the savings they depend on for groceries, utilities, insurance, medical expenses and unexpected future costs.
For homeowners in that position, accessing part of their home equity may be worth investigating. Seniors First has more information about using home equity for renovations and home improvements.
7. Could home equity help you remain in your home for longer?
For many Australians, “retirement planning” was once largely about superannuation and the Age Pension.
Increasingly, there is a third part of the equation:
the equity accumulated in the family home.
A Reverse Mortgage can allow an eligible older homeowner to borrow against part of this equity without needing to sell or make compulsory monthly repayments.
The money may potentially be used for home modifications, medical expenses, aged care needs, clearing debt, replacing a car, providing additional cash flow or other retirement expenses, depending on the lender and borrower’s circumstances.
You can read a plain-English explanation in our guide to how a Reverse Mortgage works.
But accessing the maximum amount available is not necessarily the objective.
Often, the better question is:
How much do you actually need to draw today?
Suppose you expect to require $100,000 over five years.
Drawing $100,000 immediately means interest generally begins accumulating on the full amount straight away.
A structure involving a smaller lump sum for today’s needs, combined with future instalments or a cash reserve where available, may significantly reduce the amount on which interest compounds.
That principle sits behind the Seniors First Home EquiSaver™ loan structuring method.
8. Reverse Mortgage interest rates in 2026
Reverse Mortgage rates are generally higher than standard owner-occupied mortgage rates, and this matters because interest can compound over many years.
Rates also change.
For example, Heartland Bank announced a reduction to 8.79% p.a. in April 2026 for new reverse mortgage customers at that time.
As at 12 August 2026, Heartland’s published featured Reverse Mortgage rate is 8.99% p.a., with a 9.02% p.a. comparison rate. Rates can change, so consumers should always check current pricing before making a decision.
Seniors First maintains information about current Reverse Mortgage interest rates in Australia to help borrowers understand and compare the market.
But the headline interest rate is only one part of the story.
For example, a lower rate combined with an unnecessarily large upfront draw could potentially cost more over time than a carefully structured facility where money is only accessed as required.
That is one reason using a specialist broker can be valuable.
The question should not simply be:
“Which lender has the lowest advertised rate?”
It should also be:
“Which lender, loan structure and drawdown strategy is best suited to what I actually need?”
9. What protections do Australian Reverse Mortgage borrowers have?
Australian Reverse Mortgages have important consumer protections.
One of the most significant is the No Negative Equity Guarantee, often referred to as the NNEG.
ASIC’s MoneySmart explains that this protection limits the amount owed so an eligible borrower is protected against owing more on the Reverse Mortgage than the home is worth, although exceptions can apply.
This is an important safeguard.
It does not, however, mean Reverse Mortgages are cost-free or without consequences.
Because interest compounds, the debt can increase significantly over a long period. That can reduce the equity available to you later, the amount available if you subsequently move home and the value ultimately remaining in your estate.
For this reason, borrowers should understand not only how much they can borrow, but what their loan balance could potentially look like in five, ten or fifteen years.
You can explore different scenarios using the Seniors First Reverse Mortgage Calculator.
10. Three questions to ask before releasing home equity in 2026
Before proceeding, there are three particularly useful questions to consider.
First: How much money do I actually need?
Separate expenses you need to pay today from those that may not occur for several years. If $20,000 is required now but another $40,000 may only be needed gradually over coming years, it is worth considering whether all of that money needs to be borrowed immediately.
Second: What will I do with the money once it is released?
This can be relevant to Centrelink because your principal residence is generally treated differently from cash and financial assets. If your Age Pension entitlement is important, consider obtaining appropriate Centrelink or financial advice before drawing a substantial lump sum.
Third: What government support am I already entitled to?
Before privately funding an ageing-at-home expense, check what may be available through Support at Home, including clinical care, personal care, assistive technology and eligible home modifications.
Your savings or home equity may then only need to fund the remaining gap.
A smarter way to think about home equity in retirement
For generations of Australians, the family home has often been treated as an asset that should remain completely untouched throughout retirement.
But retirement is changing.
Australians are living longer, more people want to remain in the homes and communities they know, and the financial demands of retirement can continue for decades.
For the right homeowner, home equity can potentially become another part of their retirement funding plan.
The objective should not be to release as much equity as possible.
It should be to understand what you need, what government assistance is available, how Centrelink may treat the funds, and how to access the amount required as efficiently as possible.
At Seniors First, this is a major part of what we do.
Rather than representing one lender, our specialist Reverse Mortgage brokers can compare options and help eligible borrowers consider how their loan could be structured around both immediate and longer-term requirements.
You can learn more about why borrowers use a specialist Reverse Mortgage broker and how Seniors First approaches lender comparison and loan structuring.
Want to understand your options?
If you’re considering accessing some of your home equity, a useful first step is simply to understand the numbers.
Use the Seniors First Reverse Mortgage Calculator to explore how different loan amounts and timeframes may affect the future balance of a Reverse Mortgage.
If you are still researching, you can also download our free Reverse Mortgage Guide for a plain-English explanation of how these loans work.
Or contact Seniors First and speak with a Reverse Mortgage specialist on 1300 745 745.
We can help you compare available options and consider a loan structure based on your actual retirement funding requirements.
The initial conversation is obligation-free.
Important: This article provides general information only and does not take into account your objectives, financial situation or needs. Centrelink and aged care outcomes depend on individual circumstances and can change over time. Consider obtaining appropriate financial, legal, taxation and Centrelink advice before making a decision.
