The Pension Loan Scheme (PLS) is a federal government reverse mortgage scheme. It is designed to provide support for eligible Australian pensioners in the form of a fortnightly income stream by taking out a loan against the equity in their home. It is a reverse mortgage administered by the Department of Human Services and distributed by Centrelink.
The PLS was changed from 1 July 2019 to extend eligibility to a broader range Australian pensioners of Age Pension age, including those currently receiving the maximum rate Age Pension.
The Pension loan scheme allows pensioners to borrow up to 150% – or 1.5 times – the maximum Age Pension, paid fortnightly. The maximum income available – combined Age Pension and PLS income stream to 150% of the Age Pension rate per annum; this currently corresponds to:
- a maximum $36,121.80 per annum for singles
- a maximum $54,451.80 for couples.
|Eligibility:||Australian homeowners||Homeowner and pension recipient|
|Interest rate:||4.95% effective 09 November 2020.||4.50%|
|Loan amount:||$50,000-$500,000||Up to 150% of Age Pension per fortnight|
- Income stream
- Mortgage refinance
- Aged care RADs & DAPs
|- Income stream only|
|Locations:||All metropolitan postcodes and some regional areas||Most areas|
|Maximum loan:||20% of house value at age 65, then 1% each year||Income stream based on a fraction of 25% of house value each at age 65, then approximately 1.1% each year|
|Property valuation:||At establishment||Annual|
|Regulations & protections:||Responsible lending applies and subject to the National Credit Code (NCC) including its consumer protections.||Responsible lending does not apply and not subject to the National Consumer Credit Code or its consumer protections|
|Service:||Personalised service by Household Capital team||Administered via Centrelink and subject to in-store or phone queues|
What is the PLS interest rate?
The Centrelink PLS reverse mortgage interest rate is currently 4.50% effective 01 January 2020, down from 5.25%. The rate is set by the Minister for Social Services without reference to RBA rates – until January's change, the rate had remained static since 1997.
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.