Frequently Asked Questions
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Household Loan
Who has to pay off the loan once I pass away?
Once the last homeowner has passed away, the loan is settled by the estate within 12 months.
If I leave my home to my children, when do they have to pay out the loan?
Your children and/or estate has 12 months to pay out the loan.
Will taking out a Household Loan/Reverse Mortgage mean I cannot leave much to my family and children?
The amount you can borrow is dependent on on the Loan to Value ratio (LVR). For a Household Loan, the calculation takes two factors into account – the age of the youngest borrower and the value of your property. The percentage of equity you can access is regulated by the National Consumer Credit Protection Act (NCCP). Household Capital’s LVR starts at 20% of the agreed property value for those aged 60 and increases 1% per year thereafter. Total remaining equity is a factor of the initial LVR, interest rates, growth in home values and term of your loan. In most situations, you will likely retain a reasonable proportion of equity to bequeath to your children.
How much interest do I have to pay on the loan?
Our Household Loan has a variable interest rate and changes in line with the RBA's cash rate. Up-to-date information about our current rate is available at https://householdcapital.com.au/reverse-mortgage-interest-rates/.
If I live too long, will accessing my home equity leave me or my family with no equity left?
Your remaining home equity at the end of your loan is a factor of the initial LVR, interest rates, growth in home values and the term of your loan. In most situations, you will likely retain a reasonable proportion of equity to bequeath to your children.
Can the loan be repaid before the house property is sold?
Yes. You may repay part or all of your Household Loan at any time, without penalty.
What is a Household Loan?
What is a Household Loan?A Household Loan is our innovative approach to borrowing against home equity for responsible, long-term, retirement funding. It is a type of reverse mortgage, which allows you to borrow money using the equity in your home as security. Interest is charged like any other loan, but you don’t need to make regular repayments while you live in your home.
The loan must be repaid in full when you sell or leave your home or, in most cases, if you move into residential aged care. Please see the Reverse Mortgage Information Statement for more information.
To find out more about reverse mortgages, including a reverse mortgage calculator to help you work out how much equity you may have in the future, visit the Australian Securities and Investments Commission’s free consumer website at www.moneysmart.gov.au. Try our home equity calculator or call us on 1300 760 139 to see how using your Household Capital could improve your retirement funding and help you to Live Well At Home™.
Can I take out a Household Loan to take my family on a holiday?
Our focus is on providing responsible, long term retirement funding. While a Household Loan can be used to fund travel as part of a broader retirement funding plan, we don't lend solely to fund holidays. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
How can a Household Loan make my life easier?
There are so many ways a Household Loan can transform your retirement. Here are a just few:
- It can act boost your regular income so you can do more with retirement
- You can use it to top up super or other investments
- You can help your kids get onto the property ladder
- You can help pay your grandkids education expenses
- If you have a bank mortgage, you can repay it and improve your cash flow
- You can renovate or modify your home to get it retirement ready
- Comfortably cover medical costs, health insurance and other bills
- Pay for your choice of in-home or residential aged care
Can I use a Household Loan to fund in-home care?
Yes. A Household Loan can be used to pay for your in-home care requirements, giving you greater choice and flexibility in terms of the services you can access. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Should I get legal advice?
Household Capital requires you to get appropriate legal advice to ensure you understand your rights and obligations and to confirm that a Household Loan is right for your circumstances.
Should I get financial advice?
If you are using your home equity to top up your super or other investments, you are required to obtain financial advice. This will help you determine how best to deploy your home equity to ensure improved long-term retirement funding. A financial adviser can also help structure your financial affairs to maximise your entitlements to the Age Pension.
Will my Age Pension be affected?
The Age Pension is an important source of income for many retired Australians. We can work with you to understand how a reverse mortgage can be used to preserve your pension entitlements and always recommend you speak to Centrelink to ensure your entitlements aren’t affected.
What are the costs?
Interest Rate
The interest rate on a Household Loan is 9.20%p.a. (9.23%p.a. comparison rate*).
Establishment Fee
Household Capital charges an Establishment Fee (including conveyancing) of $950.
Valuation fees may also apply to your property.
Government fees and charges to establish your loan will be charged at cost if applicable.
What protections does a Household Loan provide?
A Household Loan is a type of reverse mortgage, so you benefit from key structural and legislative protections. Ownership
- You remain the owner of your home (and benefit from any increase in property value)
- You can stay in your home for as long as you want to.
- There is no requirement for you to make periodic loan repayments (although you can do so at any time without penalty). The loan becomes repayable when you leave your home.
- You cannot end up owing us more than your home is worth.
Accredited Brokers
Can a reverse mortgage be taken out on a commercial property?
In the situation where a property is zoned purely commercial, it is not possible.
Can clients pay interest or pay down the loan if they wish to do so?
Yes – each loan is given a unique BPay number so your client can make payments into the loan as required. This helps family members or beneficiaries if they wish to pay interest. There is no penalty for early repayment.
Do clients require legal advice and at what point in the process?
Once a client has a loan approved and receives their loan documentation, they are required to have an independent solicitor review the loan contract. Note: the solicitor will not need to complete any conveyancing, simply provide advice on the contract, which is written in plain English. This is for the client’s protection.
Are there any impacts on the Age Pension?
In most cases there will not be an impact to the Age Pension, except where a large amount is withdrawn and invested/placed in the bank such that it impacts the client’s asset test or income test.
Reverse mortgages should be drawn down gradually and used as needed; this should not impact the pension and will minimise the amount of accrued interest. We always recommend the client speaks directly with Centrelink to ensure their pension entitlements are not impacted. Note: if a client receiving a pension is proposing to gift funds drawn from home equity, this should be checked with Centrelink which has clear gifting rules.
Can a Reverse Mortgage be applied for under an Enduring Power of Attorney (EPOA)?
Yes – however, it needs to be clear that the EPOA document enables a reverse mortgage to occur. Accordingly, we would prefer that the EPOA is provided early for a legal review. We also require evidence of incapacity and importantly, funds must be used for the benefit of the applicant.
Can clients use a reverse mortgage to purchase a property?
Yes, as long as there are sufficient funds to cover any shortfall in the purchase amount. In this situation, we would need a signed copy of the sale contract and a contact (usually the real estate agent) to quickly organise a valuation.
Do clients require financial advice?
Clients do not require financial advice unless they are borrowing funds to invest in superannuation, shares or other financial investments, a strategy that would require detailed consideration.
We suggest clients borrowing to cover aged care costs (RADs or DAPs) obtain advice from an aged care advice specialist as this is a complex area.
Can you assist clients who live in a retirement village?
If the client owns an over 55 strata title apartment this is possible, however for retirement villages and leasehold retirement communities we are unable to take security over any land and so cannot assist.
Can you assist clients who own their properties through a company or trust?
Reverse mortgage regulations require we must deal with “a natural person”; this unfortunately rules out a Household Loan for clients who own property through another structure.
Who do I contact to discuss a scenario?
Please send details to [email protected] and one of our specialists will be in touch to discuss it with you.
Does my client need to be retired to access a Household Loan?
As long as your client meets the age requirement, retirement is not a prerequisite.
How do I complete the ASIC Moneysmart projections?
The Moneysmart calculator provides projections to help your clients understand their possible loan balance and equity position over time, using conservative assumptions. The projections need to be provided to the client and submitted with the application.
Why should clients consider digitally signing loan documents?
As well as being very secure, using DocuSign makes the settlements process more efficient and removes any time delay with the postal system.
How do I complete identification for the customers?
Please indicate on the Specialist Broker Summary Form (Application Checklist) whether you would like us to text the client to complete a digital VOI to verify their identification.
This is a simple process and once complete, we can provide a copy of the identification report for your files. As long as your clients have a mobile phone with a camera they simply need to follow the steps.
How do I lodge an application?
Forward completed application forms and other documents to [email protected]
In Home Care Funding
Can I use a Household Loan to fund in-home care?
Yes. A Household Loan can be used to pay for your in-home care requirements, giving you greater choice and flexibility in terms of the services you can access.
What in-home care services can I get?
Depending on your mobility level and health status, there’s a range of in-home care services you can get to improve your quality of life:
- Social support – social activities in a community-based group setting
- Transport – help to get out and about, for shopping, appointments or medical services
- Domestic assistance – household jobs such as cleaning, washing and ironing
- Personal care – help with bathing or showering, dressing and hair care
- Home maintenance – minor general repairs and care of your house or garden
- Home modification – installation of safety aids such as alarms, ramps or support rails
- Nursing care – a qualified nurse makes a home visit for basic medical issues
How can I fund the care I need at home?
The waiting list for government-funded in-home care packages is significant. The waiting time can be up to 12 months and many people have to accept a package providing a lower level of care than needed. You don’t need to wait. You can use your Household Capital™ to choose your own in-home aged care supplier and services. Maybe you’d like someone to do the cooking, weed your garden or take you shopping. Having the right in-home care services, delivered by someone you like and with the regularity you need, can enhance your well-being and help you to Live Well At Home™.
Reverse Mortgage
How old do I have to be to take out a Reverse Mortgage?
The youngest borrower has to be aged 60+.
How long do I have to repay the reverse mortgage?
A reverse mortgage does not have to repaid until you sell your home, in which case it is paid as part of the settlement process. If you remain in your home until you pass away, your estate has 12 months in which to pay out the loan.
Can you lose your home with a reverse mortgage?
The short answer is no. Reverse mortgages in Australia are governed by the National Consumer Protection Act 2009.
You cannot end up owing us more than the house is worth. The “no negative equity guarantee” (NNEG) clause, introduced in 2012, means you are protected by law and cannot owe more than your home is worth, irrespective of the value of the property.
How do reverse mortgages differ from home equity loans or lines of credit?
Several banks provide lines of credit or home equity loans that allow homeowners to access the wealth built up in their property. However, getting credit from the banks has become tougher for retirees since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Any form of credit has become less available to retirees who may not have the income to demonstrate they can meet the required repayments. The regular repayments needed to service a home equity loan or line of credit are likely to reduce your cash flow and therefore diminish your retirement income. As interest rates increase, so will these regular repayments. Each month, you may have to find the funds to satisfy the bank. Many retired Australians tell us they feel insecure knowing their home is subject to repossession in the event of being unable to meet repayments. With a reverse mortgage, you don’t need to make regular repayments, although you can choose to do so. And whatever choice you make, you have guaranteed lifetime occupancy – you can stay in your home for as long as you choose.
Are reverse mortgages well regulated?
Reverse mortgages are governed by the National Consumer Credit Protection Act 2009; these protections apply to our Household Loan as well as other reverse mortgage products. 1] You remain the owner of your home and the title remains in your name. This gives you 100% exposure to any growth (or loss) in the value of your property, into the future. 2] You have guaranteed lifetime occupancy. You cannot be removed from your home by the lender, nor be forced to sell your home at any time against your will, as long as you have met your obligations under the loan, as specified in the terms and conditions of the loan contract. You do have a responsibility to remain living in your home, to ensure the council rates are paid, to keep it insured and to keep your home well maintained. 3] You cannot end up owing us more than the house is worth. The “no negative equity guarantee” (NNEG) clause, introduced in 2012, means you are protected by law and cannot owe more than your home is worth, irrespective of the value of the property.
How do I repay a reverse mortgage?
Your reverse mortgage loan is generally repaid from the future sale of your home. This may occur if you downsize later in retirement or move into residential aged care. Alternatively, the loan will be paid from the proceeds of your estate. Of course, you can repay the loan at any time without penalty.
How can I use a reverse mortgage?
Wondering how to use the equity in your home? Our customers have approached us with a diverse range of needs. These include:
- Setting up a regular fortnightly or monthly income facility
- Refinancing an existing mortgage
- Renovating or modifying their home to ensure it’s retirement ready
- Covering an unexpected medical expense
- Buying a new car
- Helping children or grandchildren buy their first home
- Funding in-home care expenses
- Funding the transition to residential aged care.
Why take out a reverse mortgage?
The purpose of taking out a reverse mortgage loan is to improve your long-term retirement funding; it enables you to access the savings in your home without needing to sell it. That way, your home can be the best place to live and the right way to fund your retirement.
Who is eligible for a reverse mortgage?
Eligibility criteria for a reverse mortgage is as follows:
- The youngest borrower must be age 60+
- Australian homeowner
- The minimum property value of $600,000
- Property must be in an eligible postcode
- Primary residences, holiday homes and investment properties are available for security.
Use our home wealth calculator to find out if you're eligible or call us on 1300 622 100.
What are the benefits of a reverse mortgage?
The key benefit of a reverse mortgage is to improve your long-term retirement funding. This, in turn, enables you to:
- Access capital or income - or both
- Establish a contingency fund
- Improve your retirement lifestyle
- Remain living in your own home
- Look forward with confidence
How does a reverse mortgage work?
A reverse mortgage allows you to access the equity in your home through a loan facility that doesn't require repayment until you vacate the property.
The amount you can borrow is a function of your age and the value of your home. The older you are, the more you can borrow. The Loan to Value ratio - or LVR - increases by 1% for each year older than 60.
As a guide, if you're aged 60, the maximum amount you can borrow is 20% of the value of your home and if you're aged 75, the maximum amount you could borrow would be 35%.
For more info, download our free 'What is a reverse mortgage?' guide, try our home wealth calculator or call us on 1300 760 139 to see how using your Household Capital could improve your retirement income so you can stay safe and Live Well At Home™.
Home Loans for Seniors
Can a pensioner get a home loan?
It’s much harder to get a home loan when you’re a pensioner because some lenders may view you as a higher-risk borrower. This is because the amount you receive from the pension is generally lower than the income requirement to qualify for a home loan.
Options for finance include a line of credit, a reverse mortgage or the Centrelink Pension Loans Scheme (PLS) It’s important to note the PLS only provides an income stream and does not provide access to capital.
Lenders are required by law to ensure you can comfortably meet any repayments; if those repayments are likely to cause you financial hardship, they are not able to provide the finance.
Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can I get a home loan at 60 years old?
There are two main challenges for older Australians when it comes to getting a home loan. Firstly, your ability to make repayments, especially once you retire. If you’re already retired and on a reduced income, lenders view this as a higher risk because you may have difficulty keeping up with your payments. As a result, if they lend at all, the bank is likely to charge you a higher rate of interest than those advertised. Secondly, most home loans are repaid over a term of 25-30 years. For older Australians, the lender may conclude that there’s an unacceptable risk of the borrower passing away before the loan can be repaid. If you apply for a home loan, your age will be a significant factor in how the bank assesses your application. It’s likely that the bank will want you to demonstrate how you plan to repay the loan with an ‘exit strategy’, the source and quantum of your retirement income and any assets you could sell to repay the loan if necessary. On the upside, banks look favourably upon those borrowers that have significant equity built up in their home and may use that to balance the risk. It is important to remember that all lenders are required by law to ensure that any finance they provide you, and the repayments that finance requires, does not adversely impact your financial situation. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Top Up
Why top up Super with your Household Capital™
Retired Australians may not have a lot of super, but they do have more than $1 trillion saved in home equity.
Accessing some of your Household Capital could increase your retirement funding. Topping up your super or other investments can be an effective way to bolster your retirement funding.
Our modelling has shown that an injection of additional funds to a superannuation account can:
- increase the amount of regular pension income you can draw
- increase the longevity of your income stream - in other words, it enables your super to provide income for more of your retirement years.
Try our home wealth calculator or call us on 1300 622 100 to see how using your Household Capital could improve your retirement income so you can stay safe and Live Well At Home.
Can I use a Household Loan to top up super or other investments?
The purpose of a Household Loan is to take care of your long-term retirement funding needs. Using it to top up your super or other investments can extend the longevity of the income stream generated by those investments. Customers using a Household Loan for this purpose are required to get independent financial advice. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can I use home equity to top up an investment portfolio?
Some retirees have been able to build up an investment portfolio over the years to provide a source of capital and income. We recognise that most investments go through peaks and troughs. When they do well, an investment portfolio can be a major source of retirement income. In a market downturn, you may prefer not to draw on a diminishing pool of capital as its ability to generate capital over the longer term will be diminished. A Household Loan can help in two ways. It can be used to supplement your income during market downturns; this avoids further impairment of your investment portfolio and allows it to recover. Your household capital can also be used to add to your portfolio, to ensure it continues to meet your long-term retirement needs and provide you with choice and flexibility in retirement. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Would I be better off by downsizing?
Many retirees rely on an income stream from super and the Age Pension to carry them through retirement. A small super balance, even when supplemented with the Age Pension, may not provide adequate retirement funding, denying retirees the comfortable retirement they’ve worked towards. Some retirees may believe the only solution is to downsize.
A house is made of brick and mortar, but a home is full of memories. Downsizing doesn’t just mean a smaller house, it can mean losing your community too. By topping up your super, you can improve your retirement income and look forward with confidence. A Household Loan can keep you where you belong
— in your own home.
Download our free downsizing guide which covers all the costs of downsizng, the alternatives and impacts on centrelink.
Try our home wealth calculator or call us on 1300 622 100 to see how using your Household Capital could improve your retirement income so you can stay safe and Live Well At Home.
Pension Loans Scheme
Can I make repayments and how?
Whilst there is no obligation to make any repayments of the HEAS until you either permanently vacate your property or you, or your estate, sell the property you can make voluntary repayments of some or all of the HEAS loan at any time without penalties or fees. HEAS borrowers can make repayments using a credit card, debit card or BPAY through their Centrelink online account. For those who do not have a centrelink online account you need to mail a bank cheque to Centrelink with your name and Customer Reference Number (CRN) details.
Do I have be on the Age Pension to be eligible for the Home Equity Access Scheme (HEAS)?
Who provides the Home Equity Access Scheme?
The Australian government is the provider of the Home Equity Access Scheme and the Scheme is administered via the Department of Human Services/Centrelink and for veterans via the Department of Veterans Affairs (DVA).
The Australian Government has provided the Home Equity Access Scheme (in various forms) since 1985. The scheme was previously known as Pension Loans Scheme (PLS) until 31 December 2021.
Am I eligible for the Home Equity Access Scheme (HEAS)?
If you are currently receiving the Age Pension or similar seniors welfare payment (or a DVA pension) and you own property in Australia, you will most likely meet the eligibility criteria.
To be eligible for the HEAS you (or if you are in a couple relationship at least one of you) need to meet the following criteria:
1. Meet Centrelink’s Australian residency requirements:
You need to have been an Australian resident for at least 10 years in total. For the last five (5) of these years, there must not have been any break in your residency.
- You are an Australian resident if you live in Australia and are either:
1. An Australian citizen; or
2. A permanent residence visa holder; or
3. A protected Special Category visa (SCV) holder
2. Be at least of Age Pension Age which is currently 66 years old but increasing to 67 as shown below:
(note: at least one applicant must meet this criteria if applying for the HEAS as a Couple)
3. Own real estate property in Australia which includes:
- Houses *
- Apartments / Units / TownHouses *
- Farm (or hobby farm)
- Commercial premises
- Retail premises
- Vacant land / bush block
- Home office / business
- Self contained flat (part of or attached to a residence)
- Market garden
- Residential block larger than 2 hectares
* There are two notable exceptions (due to not having title to the underlying land)
Retirement villages
Relocatable homes
Do I need to arrange a valuation of my property?
No. Centrelink/DVA will arrange for an independent valuation of your property before your loan is approved. Centrelink/DVA pay for this valuation and not the applicant(s).
During COVID-19, to protect seniors health and safety, many valuations are being done as either desktop valuations (using averages for your style home in your area) or drive-by valuations.
If you disagree with the Centrelink/DVA valuation you can request another valuation.
Is the HEAS regulated in the same way as commercial reverse mortgage loans?
No. Based on our legal advice and discussions with DSS, Centrelink and ASIC, while the HEAS is a ‘reverse mortgage like’ scheme, the HEAS is technically a ‘welfare claim’ under the Social Security Act and therefore is not subject to the regulations applying to commercial providers of reverse mortgage loans. The exception is the 'no negative equity guarantee' protection, which was applied to HEAS from 1 July 2022 (and which has applied to commercial providers since 2012).
My property is in the name of my private company or trust - am I still eligible?
Provided you meet the residency, pension age and property ownership criteria then if your property is owned by a closely held private company or private trust then you are still eligible for the HEAS.
There maybe additional forms that may need to be lodged in relation to the company or trust and the company or trustee will need to provide a written guarantee in relation to the HEAS debt.
Who is Pension Boost and what role do you play in the Home Equity Access Scheme (HEAS)?
Pension Boost is a subsidiary of Household Capital, an Australian independent retirement funding provider founded in 2016 with a mission to help retired Australians Live Well at Home. It offers retirees a responsible, sustainable, and flexible financial solution that allows them to bundle their superannuation savings, equity in their home and their Aged Pension to achieve their retirement goals while continuing to live at home.
There are 1.8 million seniors on the Age Pension who own property, many of whom could use additional cashflow to better enjoy their retirement.
Pension Boost are specialists in the Australian Government’s Home Equity Access Scheme (HEAS). We act as your agent when dealing with Centrelink/DVA to take the hassle out of the process for you.
Some of the ways Pension Boost assists seniors includes:
- Raising awareness of the HEAS (one of the government’s best kept secrets)
- Educating seniors on what the HEAS is, its ‘rules’ and how it works
- Assisting seniors and their families decide whether the HEAS may be of benefit to them
- Determining the type of Home Equity Access loan that best suits a senior’s individual circumstances
- We remove the hassle of dealing with Centrelink/DVA by acting as an ‘agent’
- Assisting seniors with their application for the HEAS
- Dealing with any questions or queries raised by Centrelink/DVA
- Providing ongoing reporting and reviews of a senior’s cash flow needs and Home Equity Access loan level, to ensure they remain in control of the net equity in their home, and have the funds to make ends meet
My property is co-owned with another person - am I still eligible?
Provided you meet the residency, pension age and property ownership criteria if your property is co-owned with a third party then you are still eligible for the HEAS but only for your relevant pro-rata share of the net equity in the property.
The co-owner(s) need to consent to your applying for the HEAS and they must sign their section of the HEAS application in front of a suitably qualified witness (eg Justice of the Peace).
How does the new lump sum option work?
The HEAS now provides a lump sum option which works like an advance payment and is available to all HEAS borrowers including existing borrowers.
The maximum lump sum you can access in a twelve month period is 50% of the full annual age pension which (as at 20 Sept 2022) is:
- Couples lump sum maximum - $22,427.60
- Singles lump sum maximum - $14,877.20
If you draw a lump sum from the HEAS this will reduce your HEAS fortnightly payments over the next 12 months.
Examples:
1. Couple on the full age pension wishes to access $13,000 as a lump sum and draw the maximum HEAS payments. Their maximum HEAS payments of $841 / fortnight will be reduced by $500 ($13,000 / 26). Over the year they will receive $21,876 in HEAS payments (being the current maximum for full age pension couples).
2. Single self funded retiree wishes to access maximum lump sum and HEAS payments. Their lump sum of $14,512 will reduce their HEAS fortnightly payments by $558. Over the year they will receive $43,536 in total HEAS payments (being the current maximum for a self funded single).
How long does approval of a Home Equity Access loan application usually take?
Approval of a Home Equity Access loan application is made in writing by Centrelink / DVA and this usually occurs in 10 - 14 weeks, depending on the complexity of the application.
What supporting documentation is required when applying for the Home Equity Access Scheme (HEAS)?
You will need to provide copies of the below when you start your HEAS application:
- Your property Title Deed or Certificate of Title; and
- A recent Land Valuation Notice or Council Rates Notice; and
- Your current insurance policy over the property; and
If you have an existing loan secured over the property, you also need to provide copies of a:
- Recent loan statement
- Loan contract
Do I have to take out a mortgage under the Home Equity Access Scheme (HEAS)?
No. Rather than a full registered mortgage the government secures its Home Equity Access loan to you via a ‘registered lien’ or ‘registered charge’ over the property you put up as security for your Home Equity Access loan.
Can I (or my estate) end up owing the Australian Government more than my property is worth?
No. The HEAS now comes with a No Negative Equity Guarantee which means you will not be liable for a HEAS debt that exceeds the value of your property when sold.
What about my family? Will my Home Equity Access Scheme (HEAS) impact my estate plans?
Household Capital recommends you discuss your situation with your family before considering applying for the HEAS. We are also happy to talk with them, if required, as we often have children of seniors enquiring on behalf of their parents.
A feature within the HEAS is the ‘Requested Amount’, which is an amount you can ask to be reserved for you for your future needs (like aged care facilities) or your estate.
What if I don’t need to access the maximum level under the Home Equity Access Scheme (HEAS)?
No problem - just select the level of payments you need each fortnight. You can always change the level of payments by notifying Centrelink/DVA. Household Capital can assist you to determine the level of Home Equity Access loan that you’d be comfortable with.
Does the Home Equity Access Scheme (HEAS) affect my Age Pension eligibility?
No. Whilst the Home Equity Access Scheme is linked to the Age Pension (by the maximum payment level being tied to 150% of the Full Age Pension), accessing the HEAS does not impact your Age Pension entitlements.
Does the Home Equity Access Scheme (HEAS) impact my income tax position?
No. The Home Equity Access Scheme is a loan-based payment scheme, drawing on the equity (capital) you have built in your home, so it does not impact your income tax position.
Is the Home Equity Access Scheme (HEAS) just for people who own expensive properties?
No. We’ve now run literally 10,000’s of scenarios for seniors and the median home value is $500,000. Somewhat surprisingly, a significant proportion of seniors using our calculator have mortgages outstanding. A significant majority of seniors are on the Full Age Pension and advise us they are struggling to make ends meet.
What can I use the funds from the Home Equity Access Scheme (HEAS) for?
You can use the payments you receive each fortnight under the HEAS for any purpose you wish. This could be to fund regular bills, pay for in-home care services, enjoy life’s little luxuries, a short holiday, take care of those repairs you’ve been putting off - whatever you like.
Can I change the Home Equity Access loan as my circumstances change?
Of course you can! You just need to ensure you communicate your changes to Centrelink/DVA. The HEAS includes options to:
- Take ether the maximum payment or a lower amount
- Reduce or increase the payment amount (within the maximum permitted)
- Pause your payment for a period if you don’t need the funds
- Restart your payments if you need the funds again
- Request a lump sum advance
- Select a ‘Requested Amount’ or not
Pension Boost can assist you in relation to managing your Home Equity Access loan on an ongoing basis to ensure you remain in control of your finances.
Why are retirement villages and relocatable homes excluded under the Home Equity Access Scheme (HEAS)?
Generally retirement villages and relocatable homes do not include title over the land on which the dwelling/building resides, which is why the government does not accept these forms of property as security for Home Equity Access loans.
How long might I be able to access the Home Equity Access Scheme (HEAS)?
The term over which you could potentially receive payments under the HEAS is dependent on:
- The amount of any Age Pension (or similar welfare payment e.g. widows pension) you (or you and your partner - if applicable) receive
- The net equity (i.e. the value of your property less any loans secured by that property) you have in your property
- Your age, or the age of the youngest partner, if you’re in a couple relationship
- The amount of Home Equity Access loan per fortnight you wish to access
- The value of any Requested Amount (i.e. an amount of equity you always wish to keep in your property) you determine
Generally speaking, the older you (and/or your partner) are, and the higher the net equity in your property, the longer the Home Equity Access loan payments can be made.
What is the difference between the PLS/HEAS and a reverse mortgage?
The PLS/HEAS is a government administered home equity scheme that enables Australians of Age Pension age to draw a modest income stream or capital payment each year. Unlike a reverse mortgage, it is not covered by the National Consumer Credit Protection Act, although the 'no negative equity guarantee' was recently adopted. Commercial reverse mortgages are generally more flexible in terms of the amount of income and capital available.
How does the government get its money back from a PLS/HEAS reverse mortgage?
Please note: The Centrelink Pension Loan Scheme (PLS) is now known as the Home Equity Access Scheme (HEAS) as of January 2022. The Centrelink PLS/HEAS is a loan enforceable against your secured property. You need to repay the principal and accrued interest to the Government when the last participant dies or if the property is sold (unless the loan is transferred to another property). The Government can enforce the Centrelink PLS/HEAS loan against the seller or the deceased’s estate. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What is the HEAS/PLS interest rate?
On the 1st of January 2022, the Pension Loans Scheme (PLS) was renamed the Home Equity Access Scheme with an interest rate of 3.95%.
While there are no establishment fees or monthly account fees, Centrelink may charge costs including legal fees. These costs are determined once the loan application is made and can either be paid immediately or added to the loan balance.
Learn about our Household Loan interest rates.
Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What is Centrelink's Pension Loan Scheme (PLS), now known as the Home Equity Access Scheme (HEAS)?
The original Pension Loans Scheme launched in 1985 to assist ‘assets tested’ age pensioners. It was expanded in 1997 to include income-tested age pensioners. Over the first 30 years of the program, the Centrelink Pension Loans Scheme reverse mortgage met the needs of a very small number of retired Australians, primarily rural farm owners.
The scheme has now changed and as of the 1st of January 2022 is now known as the Home Equity Access Scheme (HEAS) and is extended to all Australians at pension age regardless of whether they are receiving an aged pension or are self-funded retirees.
The Home Equity Access Scheme allows you to borrow up to 150% - or 1.5 times - the the maximum Age Pension, minus any pension payment you already receive. This does offer restrictions to those on the pension and means there is a limit to only access $14,877.20 per year for singles or $22,427.60 for couples combined.
Our Household Loan offers greater flexibility with payment options to Australians aged 60 and over along with the Lifetime occupancy consumer protection.
Try our home wealth calculator or call us on 1300 057 080. See how using your Household Capital could improve your retirement income. Live Well At Home™
How much can I borrow with the Centrelink PLS/HEAS?
The maximum total loan available is a function of your age, the equity you have in your home and the value of your property. This limitation exists so you don’t end up owing more than your home is worth.
The maximum income available - combined Age Pension and PLS / HEAS income stream to 150% of the Age Pension rate per annum; this currently corresponds to:
- a maximum $42,771.30 per annum for singles
- a maximum $64,482.60 for couples.
Individual amounts are dependent on whether applicants receive a full or part pension.
Income received via the Centrelink PLS / HEAS reverse mortgage may be reduced or ceased in the future if the value of your home drops.
Who is eligible for the Home Equity Access Scheme (HEAS)/Pension Loan Scheme (PLS)?
Please note: The Centrelink Pension Loan Scheme (PLS) is now known as the Home Equity Access Scheme (HEAS) as of January 2022. There’s a range of eligibility criteria to qualify for the Centrelink PLS / HEAS reverse mortgage. These include:
- You, or your partner, must be of pension age
- You must qualify for or receive an eligible payment; this includes the Age Pension, Disability Support Pension and Carer Payment
- You must own real estate in Australia with enough equity to secure the loan
- You must have adequate insurance covering the secured real estate
- You must not be bankrupt or subject to a personal insolvency agreement
- While Centrelink PLS / HEAS reverse mortgages do provide occupancy and No Negative Equity Guarantees, Centrelink officers who administer Centrelink PLS/HEAS reverse mortgages are not subject to responsible lending laws.
Interest Rates
What happens to the rates on a Household Loan when the RBA lowers the cash rate?
The Reserve Bank of Australia (RBA) has indicated that it might start changing (potentially lowering) rates later in 2024 or, at least in early 2025. At that time, Household Capital will change its rate accordingly for new and existing customers.
Why is the mortgage interest rate important?
The lower the reverse mortgage interest rate on your loan, the more of your home equity you retain and can access to fund your long-term retirement needs. It’s that simple. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Why are reverse mortgage interest rates higher than standard mortgages?
Reverse mortgage interest rates are generally higher than a standard mortgage because there is no obligation for borrowers to make repayments until the end of the loan. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Are reverse mortgage interest rates fixed or variable?
Reverse mortgages are only available with variable rates; the main benefit of this is that you have flexible repayment options. A Household Loan may be repaid, in part or full, at any time without penalty. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What are the costs?
Interest Rate
The interest rate on a Household Loan is 9.20%p.a. (9.23%p.a. comparison rate*).
Establishment Fee
Household Capital charges an Establishment Fee (including conveyancing) of $950.
Valuation fees may also apply to your property.
Government fees and charges to establish your loan will be charged at cost if applicable.
Refinance Home Loan
What should I look out for when refinancing in retirement?
When thinking about refinancing in retirement, there are two big issues – repayments and default. With a traditional mortgage provided by a bank or building society, regular repayments are required. If you become unable to meet those repayments, you can run the risk of default and the bank forcing a sale or repossessing your home. With a Household Loan, regular repayments are not necessary and as such, there is no default risk. You are able to stay in your home as long as you wish. Repayment is required once you sell or leave your home. It’s worth noting, you are able to make regular repayments on a Household Loan if you choose to do so. A Household Loan can be repaid at any time without penalty.
Why refinance with a Household Loan?
There are three key reasons why you should consider refinancing a standard home loan with a Household Loan in retirement: 1] Flexibility and choice - you don’t have to make any regular repayments. But you can repay part or all of your a Household Loan at any time without penalty. It's up to you. 2] Improved retirement income - because there's no requirement for regular payments, the income previously directed to repayments can be used for other purposes. 3] Guaranteed occupancy - Household Loans are a responsible, long-term retirement funding solution that come with a range of consumer protections, including lifetime guaranteed occupancy...even if you choose to make no repayments. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What should I consider if refinancing a home loan?
If you’re going to refinance your mortgage, whether with a traditional bank mortgage or with a Household Loan, you need to consider the following:
- Do you want to increase the retirement funding available to you?
- Do you want to be able to pay off the loan at any time without penalty?
- Do you want to be able to make interest-only repayments?
- Do you want flexibility?
- Do you want guaranteed occupancy?
How can I refinance a home loan in retirement?
Banks are rarely willing to help retirees refinance a mortgage and we’re often asked whether we can help older Australians refinance a home loan. The answer is yes, although as with all loans, terms and conditions apply. Our Household Loan can be used to refinance an existing bank mortgage and has three key benefits for retirees over a traditional bank mortgage:
- Improved retirement funding – as you don’t have to make regular repayments, the money you were using to service your loan can instead be used to fund your retirement
- Interest payment flexibility – you can choose to make regular interest repayments, however, there is no obligation to do so
- Guaranteed occupancy – whether you choose to make repayments or not, you have guaranteed occupancy of your home until you choose to leave it. There is no risk of foreclosure for missing a payment.
Should I refinance or downsize?
Home ownership and the family home is a strong part of the Australian identity, one that doesn't change when you retire. Home is where you’ve raised your family, created memories and established your community.
Until recently, most retirees faced with unserviceable mortgage debt felt they had no option but to sell their home. This isn’t an ideal option for everyone – appropriate housing isn’t always available in the right area and most people want to stay in their community.
Downsizing into a smaller home or unit, or even a retirement village, can result in disruption and dislocation and doesn’t always deliver a financial advantage.
Using a Household Loan, it is possible to refinance a mortgage in retirement without needing to downsize. Download our free downsizing for seniors guide to learn more
Try our home wealth calculator or call us on 1300 622 100 to see how using your Household Capital could improve your retirement income so you can stay safe and Live Well At Home.
Why refinance in retirement?
You can refinance an existing home loan by using your home equity, the savings in your home. This frees up your cash flow to improve your longer-term retirement funding. You can choose to make interest repayments each month or repay the loan when you sell or leave your home. Consumer protections, such as guaranteed lifetime occupancy, are part and parcel of refinancing with a Household Loan. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Lifestyle Expenses
How can a Household Loan transform my retirement lifestyle?
There are many ways in which a Household Loan could improve your retirement lifestyle. As well as making your home retirement ready, you may need capital to purchase a new car or cover significant medical costs. Some customers like the peace of mind that comes from having a contingency fund for those unexpected expenses that arise from time to time. Such expenditure can impact your retirement funding. Despite diligently saving for retirement, not everyone has a contingency fund to draw upon and pension income – whether from superannuation, the Age Pension, or both – seldom covers larger expenses. Drawing on your home equity - your Household CapitalTM- via a Household Loan can help you look forward with confidence and enjoy the retirement lifestyle you deserve. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can I take out a Household Loan to take my family on a holiday?
Our focus is on providing responsible, long term retirement funding. While a Household Loan can be used to fund travel as part of a broader retirement funding plan, we don't lend solely to fund holidays. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
How can a Household Loan make my life easier?
There are so many ways a Household Loan can transform your retirement. Here are a just few:
- It can act boost your regular income so you can do more with retirement
- You can use it to top up super or other investments
- You can help your kids get onto the property ladder
- You can help pay your grandkids education expenses
- If you have a bank mortgage, you can repay it and improve your cash flow
- You can renovate or modify your home to get it retirement ready
- Comfortably cover medical costs, health insurance and other bills
- Pay for your choice of in-home or residential aged care
Can I use a Household Loan to renovate my home?
It’s important that your home is as safe and comfortable as possible for your retirement years - and you can use a Household Loan to make appropriate renovations or modifications. That might mean installing a stairlift, handrails or a ramp for safety. It might mean a new kitchen, bathroom, or landscaping to make your garden less labour intensive. You can also hire a handyman to do those odd jobs, so there’s no risk of injury trying to DIY. You can access your Household Loan as a lump sum, which you can then use to make the necessary renovations to make your home retirement ready. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Aged Care Funding
What residential aged care costs should I consider?
When it comes to residential care, there are three main layers of cost:
- Basic daily fee, which is a flat fee paid by all residents to cover daily living expenses and is set at 85% of the single-person rate of the Age Pension.
- Means-tested care fee, which is an extra contribution that some people pay, as determined through a means assessment.
- Accommodation fee, which covers the cost of accommodation in the aged care residence and its maintenance.
How can I use a Household Loan to fund aged care needs?
If you or a loved one need to move into residential aged care, a Household Loan can be used to pay either the Refundable Accommodation Deposit (RAD) or Daily Accommodation Payment (DAP).
Can I use a Household Loan to pay Aged Care costs?
If you or a loved one need to move into residential aged care, a Household Loan can be used to pay either the Refundable Accommodation Deposit (RAD) or Daily Accommodation Payment (DAP). Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can I use a Household Loan to fund in-home care?
Yes. A Household Loan can be used to pay for your in-home care requirements, giving you greater choice and flexibility in terms of the services you can access. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can Household Capital help the transition to residential aged care?
Some of our customers have needed to make the transition to residential aged care. Refundable accommodation deposits (RADs) can be complex and expensive. For many, it may seem the only option available to fund aged care is to sell the family home. This may not be the best decision financially, emotionally or for your beneficiaries. Right now, your home is a non-assessable asset for your pension and a capped asset for assessing aged care fees. That could change if you sell your home. A Household Loan provides choice and flexibility. It’s particularly useful when one person is moving into residential aged care and the other wishes to remain in the family home. You can use your Household Capital™ to:
- Pay the RAD and broaden your care choices.
- Draw an income stream to pay the daily accommodation payment (DAP).
Bank of Mum and Dad
How big is the bank of mum and dad in Australia?
The ‘bank of mum and dad’ or BoMaD ranks as Australia’s tenth-largest lender according to the Australian Prudential Regulation Authority, accounting for more than $29 billion in funding for kids.
Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What are the tax implications of being the bank of mum and dad?
While you should get advice from your accountant specific to your circumstances, there could be implications if you lend money, depending on whether interest is payable. If that’s the case, that interest could be considered investment income and therefore taxable in the hands of the lending parent. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Will my Centrelink entitlements be impacted?
Before you give your kids money to buy a house or cover education expenses, be clear whether it’s a gift or a loan. If it’s a gift and you receive the Age Pension (or other benefits), you must declare it to Centrelink. The annual limit for gifting is $10,000 (or $30,000 over five years depending on your situation)– anything above that may affect your entitlements for up to five years. If it’s a loan, it can still impact your pension entitlements. If you lend your children money instead of gifting it, that loan will be treated by Centrelink in the same way as most other investments, with a deemed rate of return – even if your kids weren’t expected to pay you interest or stop paying the interest you agreed. Importantly, the impact of the loan on your Age Pension isn’t limited to five years, but for as long as the loan is outstanding. It can also be advisable to provide your kids or grandkids with a statutory declaration stating whether it’s a gift or a loan and if it’s the latter, the terms. We require legal advice for all Household Loans; any terms agreed by you and the recipients should be documented as part of this process. Your Household Loan must be right for you as well as the right thing to do by your kids. In matters of money, emotions can get the better of us. Being clear and upfront will keep everyone secure. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Can being the bank of mum and dad affect my pension?
Before you give your kids money to buy a house or pay education expenses, be clear whether it’s a gift or a loan. If it’s a gift and you receive the Age Pension (or other benefits), you must declare it to Centrelink. The annual limit for gifting is $10,000 (or $30,000 over five years depending on your situation) – anything above that may affect your entitlements for up to five years. If it’s a loan, it can still impact your pension entitlements. If you lend your children money instead of gifting it, that loan will be treated by Centrelink in the same way as most other investments, with a deemed rate of return – even if your kids weren’t expected to pay you interest or stop paying the interest you agreed. Importantly, the impact of the loan on your Age Pension isn’t limited to five years, but for as long as the loan is outstanding. It can also be advisable to provide your kids or grandkids a statutory declaration stating whether it’s a gift or a loan and, if it’s the latter, the terms. We require legal advice for all Household Loans; any terms agreed by you and the recipients should be documented as part of this process. In matters of money, emotions can get the better of us. Your Household Loan must be right for you as well as the right thing to do by your kids. Being clear and upfront will keep everyone secure. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What other strategies can I use to be the bank of mum and dad?
Traditionally, parents helping their children have generally used three strategies, each of which has its downsides. The most common strategy is for parents to raid their retirement savings, which can wreak havoc on future retirement plans. It might leave you with reduced income or mean your retirement nestegg is not there for you when you need it. The second strategy is to be a mortgage co-borrower, which means you’re on the hook for mortgage repayments if your child misses them. The third strategy is to be a guarantor on a mortgage, which can constrain your own ability to borrow and may put your property at risk if your child defaults on their mortgage repayments. A Household Loan removes these risks because it doesn’t have to be repaid until you leave your home or it's sold. You could even agree a regular repayment schedule with your child; payments could be used to make interest-only repayments on your Household Loan, or agree a lump-sum repayment may pay off your Household Loan at a future date. There is no penalty for repayment of your Household Loan at any time. A Household Loan enables you to help your children and grandchildren when they need it most and use your Household Capital to help the next generation build theirs. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
How does the bank of mum and dad work?
It’s important to ensure that intergenerational wealth transfer is responsible; you must make sure your own needs are met before trying to assist your loved ones. However, if your retirement funding needs are in hand, you can use a Household Loan to contribute to a first home buyers deposit, help children with mortgage expenses or cover the costs of education. This approach enables you to help children and grandchildren when they need it most and use your Household Capital™ to help the next generation build theirs. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
Equity Release
If I live too long, will accessing my home equity leave me or my family with no equity left?
Your remaining home equity at the end of your loan is a factor of the initial LVR, interest rates, growth in home values and the term of your loan. In most situations, you will likely retain a reasonable proportion of equity to bequeath to your children.
How safe is equity release?
Most equity release products are governed by the National Consumer Credit Protection Act 2009; these protections apply to our Household Loan and other reverse mortgage products.
- You remain the owner of your home and the title remains in your name. This gives you 100% exposure to any growth (or loss) in the value of your property, into the future.
- You can stay in your home as long as you want to – you have guaranteed occupancy. You cannot be removed from your home by the lender, nor be forced to sell your home at any time against your will, as long as you have met your obligations under the loan, as specified in the terms and conditions of the loan contract.
You do have a responsibility to remain living in your home, to ensure the council rates are paid, to keep it insured and to keep your home well maintained. - You cannot end up owing us more than the house is worth. The “no negative equity guarantee” (NNEG) clause, introduced in 2012, means you are protected by law and cannot owe more than your home is worth, irrespective of the value of the property.
Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What are the costs of equity release?
Each type of equity release product has a different cost structure, which is why it’s important to do your research and seek advice where required.
In terms of our Household Loan, we offer a consistently low rate for a reverse mortgage product in Australia. The variable interest rate is currently 8.95%.(comparison rate 8.98%)*
Try our home wealth calculator or call us on 1300 622 100 to see how using your Household Capital could improve your retirement income so you can stay safe. Live Well At Home™.
Can equity release provide a regular income stream?
A Household Loan can provide a regular income stream, capital - or both! We provide flexibility and choice so you can use your money in a way that best enhances your long term retirement funding. Taking the money only as you need it will minimise the interest accrued over the life of your loan. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
What is equity release?
Equity release is the mechanism through which you can draw on your home equity. Your home equity can be accessed in several ways: 1] - by selling your home and downsizing – use the excess proceeds of the sale (if any) to top up your retirement savings 2] - through an equity reversion scheme – instead of borrowing against the value of your home, you agree to sell a share of the future sale proceeds of your home in exchange for a capital sum now 3] - the Centrelink Pension Loans Scheme reverse mortgage – this enables eligible pensioners to receive an additional income stream by taking out a loan against the equity in your home 4] - through a standard reverse mortgage – a loan facility that draws on your home equity 5] -through a Household Loan – which enables you to draw on the wealth in your home, your household capital, to improve your long term retirement funding. Each of these strategies allows you to access a portion of your home’s value to meet your retirement needs. Try our home wealth calculator or call us on 1300 622 100. See how using your Household Capital could improve your retirement income. Live Well At Home™
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