Government rejigs reverse mortgage scheme, lowers interest rate

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on December 15, 2021 Fact Checked
Government rejigs reverse mortgage scheme, lowers interest rate

The 'Home Equity Access Scheme' will allow retirees to tap into their equity now at a 'substantially' lower interest rate.

Formerly known as the 'Pension Loans Scheme', the scheme's interest rate will drop from 4.5% p.a. to 3.95% p.a. - due to take effect on 1 January 2022 - reducing borrowing costs for participants and allowing them to use it for longer.

Minister for Families and Social Services Anne Ruston said this would give older Australians 'more confidence' to tap into their equity.

"The Morrison Government is committed to finding new and innovative ways to support older Australians in their retirement," Minister Ruston said.
"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."

Under the scheme, retirees can access a non-taxable fortnightly loan. They can borrow up to a maximum value of 150% the rate of the age pension.

Seniors advocates back the change

National Seniors Australia Chief Advocate Ian Henschke said this 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.

"The old name of the scheme was confusing. Many people didn’t realise they were eligible and many also were put off by the high interest rate."

Mr Henschke said 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.

"Most house prices around the country have been going up, so homeowners will be able to tap into their equity and have a higher standard of living," he said.

"This will be good for seniors and the economy."

Council on the Ageing (COTA) Australia Chief Executive Ian Yates said the lower interest rate will be seen as an early Christmas present for those using the scheme. 

"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."

Scheme is an 'attractive option' for all retirees

To be eligible for the Home Equity Access Scheme, retirees must:

  • Have reached Age Pension age
  • Own real estate in Australia
  • Meet residency and certain other requirements

However, they don't need to be receiving the Age Pension to access the scheme.

"The lower interest rate, together with the upcoming enhancements, will make the Scheme an attractive option for retirees," Minister Ruston said.
"The new name also seeks to make sure that all retirees, not just those on a pension, know they can benefit from the Scheme if it suits their circumstances."

While these changes will come into effect in less than a month, they also build on a package of proposed improvements to introduce a No Negative Equity Guarantee.

Introduced in Parliament in early December - and due to take effect from 1 July 2022 - this would allow users of the scheme to access capped lump sum advance payments.


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Image by Katarzyna Grabowska on Unsplash


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.,,, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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