New changes to the Federal Government’s Home Equity Access Scheme (formerly the Pension Loans Scheme) could help older Australians access the value in their homes – but rental, land lease and retirement village residents need not apply.
The reverse-mortgage scheme allows Australians who have reached Age Pension age – either 66 and six months or 67, depending on your birthdate – to access the equity in their homes and receive voluntary non-taxable fortnightly loans of up to 150 per cent of the Pension.
As of 1 January, the Government has cut the compound interest rate from 4.50 per cent to 3.95 per cent per annum, with more changes – including the ability to bring forward lump sum advances, and a guarantee that participants will not have to repay more than the equity they hold in the property used to secure the loan – on the way for July 1.
According to Families and Social Services Minister Anne Ruston (pictured), this is not just for pensioners: all retirees who meet the requirements can access the scheme.
“Home ownership is a bedrock of our society with Australians working hard to accumulate wealth in the form of real estate 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,” she said.
However, there are big exceptions: because you need to own the title on the land, rental residents, retirement village residents, and people in land lease communities (who own their homes, but not the land they sit on) can’t access it.
“As loans under the scheme are generally repaid only when the securing property is sold, or out of the person’s estate, this ensures the security is likely to be adequate over the long term and the debt can be recovered.
“Properties using land lease, leasehold, or loan licence arrangements do not constitute land ownership, and cannot be used as security for the purposes of the scheme,” a spokesperson for the Minister said in emails seen by the Courier-Mail.
Here’s hoping we see some changes soon.
