HEAS vs reverse mortgage: smart ways to fund your retirement
The Home Equity Access Scheme (HEAS) and a reverse mortgage both allow older Australians to unlock equity in their home to fund retirement, but there are key differences between them. Here’s a summary to help you understand how they compare:
HEAS vs reverse mortgage – key differences
| Feature | Home Equity Access Scheme (HEAS) | Reverse mortgage |
|---|---|---|
| Provider | Australian Government (via Centrelink / Services Australia) | Private financial institutions (e.g., banks, lenders) |
| Eligibility | Age Pension age (currently 67), Australian real estate ownership |
Generally age 60+, homeownership required |
| Purpose | Supplement income via fortnightly or lump sum payments | Lump sum, regular income, or line of credit |
| Loan limit | Max combined HEAS + pension = 150% of max Age Pension |
Based on lender’s loan to value ratio (LVR), property value, and age |
| Interest rate | Government-set rate (currently 3.95% p.a.) | Variable and typically higher than HEAS |
| Repayments | Voluntary – otherwise repaid from sale of home or estate |
Voluntary – repaid when home is sold, borrower moves or passes away |
| Fees | Minimal – no entry, exit or ongoing account-keeping fees | Establishment fees, ongoing fees, legal and valuation costs may apply |
| Use of funds | Funds received must be used for living expenses | Funds may be used for any purpose |
| No negative equity guarantee | Yes | Yes (mandatory under National Credit Code) |
| Impact on Centrelink | Income from HEAS not assessed as income; loan itself is not an assessable asset | Lump sums may impact Centrelink entitlements depending on usage |
When might you choose one over the other?
- HEAS is ideal for those wanting government-backed, low-cost fortnightly income support to supplement retirement – particularly if you’re already receiving part or no Age Pension.
- Reverse mortgages offer more flexibility in how and when you access funds, but come with higher costs, commercial lending terms, and potentially greater impacts on Centrelink entitlements.
Learn more
Visit our detailed articles:
👉 Understanding reverse mortgages – Peak Advice
👉 Using your home to fund retirement: the Home Equity Access Scheme explained
Or download our fact sheet:
📄 Understanding the Home Equity Access Scheme – MLC
Need help choosing?
Contact Brendan O’Reilly at Peak Advice to explore how these strategies may suit your situation.
At Peak Advice, we’re retirement planning experts based on the Sunshine Coast, providing tailored advice and a full suite of financial planning services to help you enjoy life beyond work.
Information contained in this article is of a general nature only. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Capstone Financial Planning nor their directors, employees or authorised representatives, do not give any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document.