How retirees are using home equity to boost income

It’s a truth universally acknowledged that a retiree with a home but little in the way of super or other assets could do with some extra income.

Around 80% of Australian retirees own their home, with a median value of about $800,000. That’s more than four times the median super balance at retirement of less than $200,000; enough to last 15 to 20 years but not the 25-plus years many of today’s retirees can expect to live.

While the Age Pension is a safety net, it doesn’t stretch far. Finding extra cash for unexpected medical costs, aged care, mortgage debt or a desire to help the kids may be out of reach for many.

So it’s not surprising that there’s growing interest by the government and the private sector in finding ways to help retirees unlock the wealth in their home.

The Home Equity Access Scheme (HEAS)

To encourage take-up of the scheme, the government enhanced its Home Equity Access Scheme (HEAS) in July 2022 to allow lump sum payments as well as regular fortnightly income. It also added a no negative equity guarantee (NNEG) to ensure the borrower, or their family, can never owe more than the market value of their property when it’s sold.

The private reverse mortgage sector is also expanding, with new products and new entrants into the market tapping into different areas of need.