Retirees who own their own home and need more money in retirement can now access the Home Equity Access Scheme, run through Services Australia. The scheme was previously known as the Pensions Loans Scheme. Along with its new name, the scheme’s fortnightly interest rate has been lowered to 3.95% per annum. To access the scheme, there’s no need for you or your partner to be on the Age Pension, although certain other requirements need to be met, including being of at Age Pension age and owning real estate in Australia that can be used as security for the loan.

There are costs associated with starting and stopping the scheme – for example, Services Australia will place a charge or caveat on the property offered as security for the loan, and you’ll need to pay the costs involved. These costs don’t need to be paid upfront but can be added to the loan balance.

TIP: The scheme is flexible, which means you can stop receiving payments at any time and make repayments at any time, but regular repayments aren’t required. Rather, you have the choice to wait to pay the loan, legal costs and accrued interest in full when you sell the property you’ve used as security.

Payments under the scheme will continue until you reach your maximum loan amount. This amount depends on your age, your partner’s age (if you have one), and the market value of the property used as security. For example, for a single person aged 70 who has a home with a market value of $800,000, the maximum loan amount available under the scheme is $246,400.