Pension Loans Scheme: Government Reverse Mortgage to be Expanded

By Darren Moffatt

May 10, 2018


Australian seniors with full age pension entitlements can now access the government-funded Pension Loans Scheme at a max of $17,800 annually as part of the key changes introduced in the 2018 Federal Budget.

The Australian Government has been offering the Pension Loans Scheme through the Centrelink as a voluntary reverse equity mortgage for older Australians who need to supplement their retirement income. 

It is important to take note that the changes in the PLS will start on 1 July 2019, if legislation passes.

In the private sector, we see this government program as a validation of our efforts to promote reverse mortgage as a way for seniors Australians to live a better retirement. The recent expansion further attests to the benefits of tapping home equity to fund needs during retirement age.

What is a Reverse Mortgage?

If you are still not aware, a reverse mortgage will allow you to access the wealth of your home without the need to sell it. Basically, the loan proceeds can be used to improve the standard of living when you stop working.

Relying on Age Pension may not be enough to live a comfortable retirement. Many pensioners don’t have the ready cash for their everyday expenses, but they are living in homes that are valued at hundreds of thousands. Instead of selling it, you can instead convert a percentage of the property to cash that you can use for various needs such as aged care, home renovation, debt consolidation, and even buying a car.

[ Related Post: Reverse Mortgages in Australia, Seniors First Video ]

Expanded Pension Loans Scheme

The Pension Loans Scheme is quite similar to the reverse mortgage offered by Seniors First because it also uses the home equity in providing a loan for seniors.

With the current expansion, Australian seniors, including self-funded retirees and full-rate pensioners can access the loan up to $17,800 for couples without affecting their age pension entitlements. The loan should be repaid if the pensioner decides to sell the property, move into an aged care facility, or passes away.

Aside from the expansion of the Pension Loans Scheme, Australian seniors may now avail of the additional 14,000 home care packages, and the improved Pension Work Bonus.

These recent changes are commendable because they could help age pensioners improve their lives. As one of the leading providers of reverse mortgages, Seniors First is dedicated to helping Australian seniors enjoy financial freedom in retirement.

If you want to know more about reverse mortgage, you can call Seniors First on  1300 745 745 or visit

  • On a 10 acre hobby farm , own outright and two on full pension
    Approx value $750k
    What is the max I can draw per year

    • Hi Ross,

      Thank you for your comment.

      I believe our consultant has been in touch with you today, however please give us a call on 1300 745 745 if you have any further questions.

      have a great evening

      Kind Regards,
      Seniors First

  • I have a property worth 1,800,000 but owe $800,000 with the bank (mortage). Can I still use the $1,000,000 left as equity to increase my fortnightly aged pension to apply for the govt funded loan scheme. I am 70.
    Or do I need to have fully paid out my loan with no mortgage to get an increase I my fortnightly pension.

    • Hi Kat,
      Thank you for leaving a comment. One of our team members will be in touch with you shortly.
      Wishing you a very Merry Christmas!
      Kind Regards,
      Seniors First

    • Hello,
      Thank you for leaving a comment.
      Unfortunately, none of the reverse mortgage lenders we use provide funding if you don’t own the land, unless it is a strata title.
      Kind Regards,
      Seniors First

  • Hi, my question is, my wife and I are leaving a retirement village and will have around $430,000 to purchase in the Maitland area. Prices have escalated over the 18 months and we are finding we will have to pay in the high $400,000s for a home. I am 81 and my wife 83, would we be able to qualify for a reverse mortgage to bridge the gap

    • Hi Tony, thanks for the comment. Reverse mortgage are generally not suitable for short term or bridging finance. Please call our office on 1300 745 745 to discuss further. Regards, Team SF

    • Hi John, reverse mortgages usually take about 4-6 weeks from application funding. But they can take longer for refinances, or with some newer lenders. Team SF

  • But what they don’t advise and it is not in the paper work -filled out all of the forms for a Reverse Mortage only to be told we don’t qualify because we live on more than 12 acres. Should be in the paperwork wasted 2 days filling out paperwork for nothing

    • Hi Judy, sorry if your loan did not get approved. Unfortunately we don’t control approval, and the reverse mortgage lenders reserve the right to approve or decline every loan application. Some acreage properties are OK, but it often comes down to the individual valuation report. Regards, DM

  • The interest rate is too high, when banks, especially community banks the interest rate is 3.39% Regional Australia Bank

    • Hi Lorraine, yes the reverse mortgage interest rate is higher than a normal mortgage. This is because the interest is ‘capitalised’, so you are not required to make any regular payments (it’s all repaid when the property is sold in future). Therefore reverse mortgage lenders can have their money tied up for 20 or 30 years on these loans, without getting any of their capital back. This is why the rate is a bit higher than a normal home loan. I hope that helps your understanding? regards, Darren

  • I would like info on whether we are able to get a reverse mortgage in say 4/5 years time. I am 79, my wife is 75, we own our house worth $900,000 and have a allocated super fund of approx. $xxx,000. (shares worth $20,000 are our only other major asset)
    I need to update my 21year old car and would like to go on one more overseas holiday. When my money runs out do I qualify for the Government scheme?
    Thank you

    • Hi Peter, apologies for the delay in responding. Yes from the info you have provided it appears you will qualify for up to 30% of the property value as available credit – about $300k subject to valuation and approval. It is best practise with a reverse mortgage to only borrow what you need and to draw down funds gradually where ever possible (it delivers a significant saving in interest costs over the medium and long term). You cannot have the Pension Loans Scheme (PLS) at the same time as a reverse mortgage – the reverse mortgage lenders can not lend you money if the government already has a caveat over your property. Please contact the Seniors First office on 1300 745 745 for more info. Regards, SF

  • How does this help pensioners when you can borrow under $20000 from a bank using your home as equity. Their interest rates are as low as 3.29 per cent.

  • After discussions I was wondering if you could give me information in regards to applying for a reverse morgage. This is not a quick decision as have discussed with our bank manager as well. Thank you for your assistance.

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