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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Looking to take control of your retirement? This table below features SMSF loans with some of the most competitive interest rates on the market.

Lender

VariableMore details
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  • No monthly, annual or ongoing fees
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loans.com.au – SMSF 70

  • Available for Purchase and Refinance. No application fee and no settlement fee
  • No monthly, annual or ongoing fees
  • Access your SMSF loan via our easy-to-use online app Smart Money
VariableMore details
  • No fees for Refinance only (Excluding gov. charges)
  • Includes a 100% offset account and flexible repayment options
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Reduce Home Loans – Capitalizer SMSF Refinance (Principal and Interest) (LVR 65%-70%)

  • No fees for Refinance only (Excluding gov. charges)
  • Includes a 100% offset account and flexible repayment options
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VariableMore details

Firstmac – SMSF 70 (Refinance Special)

    VariableMore details

    Liberty Financial – Liberty Residential SMSF (LVR < 80%)

      VariableMore details

      La Trobe Financial – SMSF Residential

        VariableMore details

        Yard – SMSF Loan (Principal and Interest) (LVR < 80%)

          VariableMore details
          • Available for Purchase and Refinance
          • No application fee and no settlement fee
          • No monthly, annual or ongoing fees

          loans.com.au – SMSF 80

          • Available for Purchase and Refinance
          • No application fee and no settlement fee
          • No monthly, annual or ongoing fees
          Important Information and Comparison Rate Warning

          Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 16, 2024. View disclaimer.

          Image by Katarzyna Grabowska on Unsplash