Good News for Seniors? Government Overhauls Reverse Mortgage Scheme

By Darren Moffatt

March 23, 2022


Reverse Mortgage

The Morrison government has announced the cutting of interest rate it charges for Australian retirees who unlock their home’s equity.

Known as the government’s version of a reverse mortgage loan, the Pension Loans Scheme (PLS) will now be called Home Equity Access Scheme (HEAS).

The scheme will still allow pensioners to tap into their home equity but not at a reduced interest rate.

[ RELATED POST: ‘Government Reverse Mortgage’ (PLS) vs Home Equity Release Lenders ]

From 1 January 2022, the interest rate went down from 4.5% p.a to 3.95% p.a., making the scheme more affordable for borrowers.

Minister for Families and Social Services Anne Ruston claims the new rate will give older Australians ‘more confidence’ to tap into their equity.

“The Home Equity Access Scheme allows Australians over the Age Pension age – whether they are pensioners or self-funded retirees – to unlock this equity using a trusted Government product to boost their disposable income in retirement,” Ruston added.

Under the scheme, the Australian government will provide retirees with a voluntary non-taxable fortnightly loan up to a maximum value of 150% of the age pension rate.

Seniors Advocates Welcome the Change

Council on the Ageing (COTA) Australia Chief Executive Ian Yates said “This enhanced scheme will make a positive difference to a growing number of older Australians looking for ways to better fund their retirement,” Mr Yates said.

“Assisting those older Australians who wish to safely access their substantial equity in their homes will mean access to funds to enable people to live a more comfortable retirement which they can afford, and they deserve.”

Meanwhile, National Seniors Australia (NSA) Chief Advocate Ian Henschke believes the change shows the government is listening to older Australians.

“It’s good Minister Ruston, and the government have recognised our campaign on the need to rebrand and to lower the interest rate,” Mr Henschke said.

Mr Henschke added that the scheme’s changes – a lower interest rate, ability to take out two lump sum payments yearly, no negative equity clause, and increased awareness about the scheme – are all big improvements.

Government Reverse Mortgage Is Still Limited

The evolution of the PLS to HEAS is commendable and solid proof that the government recognises the value of the reverse mortgage in helping Australian seniors.

However, it is fairly limited compared to reverse mortgage loans offered by private lenders.

As of today, borrowers can only receive the proceeds of a HEAS loan through a regular income stream, and the amount can be obtained each fortnight of up to 150% of the pensioner’s max rate.

[RELATED POST: Pension Loans Scheme Extension Benefits Age Pensioners But Still Limited ]

Lump sums will be available under the HEAS from 1 July 2022, but this is not yet law, and the amount will be capped.

So a HEAS loan may not be suitable for pensioners who need a sizeable lump sum required for essential expenditures such as payment for Refundable Accommodation Deposit (RAD).

RAD is an upfront lump sum payment to an aged care home, averaging $300,000 to $400,000.

To help you learn more about reverse mortgages, you can download our FREE REVERSE MORTGAGE GUIDE. You can also call Seniors First Finance at 1300 745 745 or post your comments below.




  • Unfortunately, we live in a land lease lifestyle village living on a pension income, having a few health expenses, not able to indulge in extras or trips, and having tried both the government and the private reverse plan, we’ve been denied twice because of the type of home, very disappointed!

    • Grace
      I think it’s depends on particular villages but in do know of two particular villages where reverse mortgages are available . I am in that process now

    • Hi Andrew,
      Thank you for your enquiry.
      We would love to discuss your enquiry further.
      Please call us today on 1300 745 745.
      With many thanks
      Seniors First

    • Hi Andrew,

      Thank you for your message.

      We would like to discuss your enquiry further, please call us on 1300 745 745.

      Kind Regards,
      Seniors First

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