The HEAS works by using the equity in your home as security for a loan from the government. You can determine the proportion of your home's value to offer as security and choose to get the loan amount as a fortnightly amount, an advance payment of the loan as a lump sum, or a combination of both.

You’ll receive your set payment every fortnight until you reach the maximum amount of your loan. You may also be able to receive an advance payment as a lump sum, although this could affect subsequent fortnightly payments, under the scheme.  

The interest rate for loans under the scheme is set by the government. All HEAS loans come with a no-negative-equity guarantee, which means that the amount repayable will never exceed the value of your home. However, interest will accrue on your loan each fortnight on the loan balance, until you repay the loan in full. You must repay the loan to the government plus interest and legal costs.

Reverse mortgages typically attract higher interest rates than standard home loans, meaning the amount owed could grow more quickly over time. 

The prospect that your family may have to repay substantially more than the principal amount borrowed can be frightening for some. The HEAS aims to offset these concerns via strict borrowing limits, the no-negative-equity guarantee and a government-controlled interest rate.  

You can apply for a loan under the HEAS if you or your partner are at Age Pension age or older. This varies from 65 to 67 depending on when you were born. You or your partner must own real estate in Australia with adequate insurance on the property and you can’t be bankrupt or subject to a personal insolvency agreement.  

There are also limits on the amount you can borrow (and therefore receive as a fortnightly payment) depending on if you currently receive a pension. For full details of eligibility requirements, visit the Services Australia website.  

If you need to release equity in your home to help fund your retirement, the HEAS can offer more safety and security than many alternatives. But how much should you borrow? When can (and should) you pay it back? How does using the scheme impact your long-term retirement goals? 

These are difficult questions to answer by yourself, which is why we’re here to help. Our specialist financial planners can help you navigate the HEAS and its suitability for you. They can provide you with personal advice about what you could borrow and how it will affect your retirement over time.