The Centrelink Home Equity Access Scheme (HEAS) provides older Australians with an opportunity to access the equity in their homes to supplement their retirement income. Formerly known as the Pension Loans Scheme (PLS), this government initiative offers a loan to eligible homeowners, providing financial flexibility without the need to sell their homes. This guide explains how the HEAS works in 2025, eligibility requirements, borrowing limits, and the benefits and risks associated with the scheme.

Overview

The HEAS is designed for seniors aged 65 and older, allowing them to convert their home equity into a loan that provides fortnightly payments or a lump sum. The scheme offers financial relief during retirement, with repayments deferred until the home is sold, the homeowner moves into care, or upon their passing.

The HEAS allows seniors to access their home equity while continuing to live in their homes, providing a steady income stream for retirement expenses.

Eligibility

To qualify for the HEAS, applicants must meet specific criteria:

• Age Requirement: Applicants must be 65 or older; for couples, at least one person must meet this requirement.
• Homeownership: The applicant must own and live in the property as their primary residence.
• Residency: Applicants must be Australian citizens, permanent residents, or New Zealand citizens with at least 10 years of residency in Australia.
• Financial Capacity: Applicants need to demonstrate the ability to manage the loan.
• No Income or Asset Test: Unlike the Age Pension, the HEAS does not have income or asset limits for eligibility, though existing mortgages may affect available equity.

Borrowing Limits

The amount available through the HEAS depends on the applicant’s age and home value. Older applicants can borrow more due to shorter expected loan durations. For example:

Applicants can also opt for a lump sum payment, determined by their home’s equity and financial needs.

Loan Interest and Repayment

The HEAS loan has a fixed interest rate of 4.94% in 2025, reviewed every six months. Interest compounds annually, increasing the total amount owed over time. Repayment is required when the home is sold, the owner moves into care, or passes away, usually from the sale proceeds.

Impact on Pension and Estate

While the HEAS does not affect Age Pension eligibility, the equity in the home is considered under the pension asset test. The loan amount and interest can reduce the remaining equity in the home, potentially affecting inheritance for heirs. It is important for applicants to consider how the scheme aligns with their estate planning goals.

Risks

The HEAS offers financial benefits but comes with risks:

• Interest Accumulation: Compounding interest increases the loan balance over time.
• Reduced Inheritance: Loan repayment from the home’s sale may leave less for heirs.
• Changing Costs: Interest rate adjustments or larger borrowings can increase the final repayment amount.

Alternatives

Comparing the HEAS with other options, such as reverse mortgages, is essential. Reverse mortgages may have different terms, rates, and repayment conditions. Government pensions, like the Age Pension, provide regular income but have income and asset tests, making the HEAS more accessible for some retirees.

Managing the Loan

To manage the HEAS effectively:

• Monitor Borrowings: Keep track of loan amounts and interest growth.
• Consult a Financial Advisor: Seek professional advice to ensure the loan fits your retirement plan.
• Plan for Repayment: Prepare for loan repayment through estate planning or other financial strategies.

The Centrelink Home Equity Access Scheme is a valuable tool for older Australians seeking to enhance their retirement income without selling their homes. Knowing the scheme’s details, including eligibility, borrowing limits, and potential risks, helps applicants make informed decisions for their financial future.

FAQs