How Retirees Are Using Home Equity To Boost Income

How to get the most from HEAS

Despite relatively high levels of home ownership among Australian retirees, take-up of HEAS is still relatively low, although growing rapidly.

Following the changes in July 2022 allowing lump sum payments and the introduction of a no negative equity guarantee, take-up has more than trebled from 6,041 participants in June 2022 to 19,946 in March 2026. Around 72% of participants are on a full Age Pension, 22% are part-pensioners and just 5% are fully self-funded retirees who are more likely to use commercial reverse mortgages.

The average HEAS loan amount was $36,875 in March 2026 while the total amount of money drawn stood at $716 million, up from just $138 million in June 2022.

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A study by the ARC Centre of Excellence in Population Ageing Research (CEPAR) at UNSW looked at who is using HEAS and how. It found 91% of HEAS users opt to receive the maximum amount they are eligible for.

To find out if this is the best use of the scheme, the study modelled four different strategies using 20 different household types, including couples and singles aged 67 who are eligible for the Age Pension and HEAS, with and without children, with income from housing, super and other assets, and five different wealth levels.

The strategies were:

• ASFA standard: Use HEAS so combined income from super, other assets, the Age Pension and HEAS reaches the Association of Superannuation Funds of Australia (ASFA) comfortable lifestyle budget for the household type
• 70% replacement: Use HEAS so the combined income from super, other assets, the Age Pension and HEAS reaches a 70% pre-retirement income replacement rate
• Maximum payment: Receiving the maximum amount from HEAS annually
• Lump sums + ASFA: Use lump sum payments to cover aged care expenditures plus fortnightly payments to support an ASFA-comfortable lifestyle.

One of the study’s authors, Dr Katja Hanewald, Associate Professor in the School of Risk and Actuarial Studies at UNSW Sydney, said results were measured not just on financial outcomes but the value people place on having extra cash now rather than in future, living in their own home and giving to their children.

The study found most households are better off receiving the maximum payments. The ASFA standard strategy provided the highest gains for lower-income households and women, while the 70% replacement strategy benefited wealthier households.

The following case studies illustrate some of the ways retirees are using HEAS.

Access to lump sum payments

While commercial reverse mortgage providers have long offered lump sums as well as regular income payments, HEAS borrowers have only been able to receive lump sum advances since July 2022. The maximum advance (which may be taken in one or two bites) is capped at 50% of the maximum annual rate of Age Pension. Currently that is up to $23,535 for couples and $15,611 for singles.

People may choose to use the lump sum for a variety of reasons – from maintaining the home or replacing the car to repaying credit cards, large bills, health and aged care costs.

While the relatively modest sums available via HEAS attract Age Pensioners on lower incomes, self-funded retirees may be more attracted to the flexibility and larger potential payments offered by commercial reverse mortgages, albeit at higher rates of interest. The current interest rate for a government-backed HEAS loan is 3.95%, compared with around 8% or more for commercial reverse mortgages.

Growing demand for reverse mortgages

Commercial reverse mortgages in Australia come in various forms and names, including home equity release and home reversion. Since a regulatory shake-up in 2012, consumer protections have been enhanced, including no negative equity guarantees.

As cost-of-living pressures squeeze retiree budgets, demand for alternative sources of income is likely to increase.

A 2026 survey by Deloitte found the average commercial reverse mortgage in the 12 months to June 2025 was $150,000, well above the maximum amounts available under HEAS. They are also available to younger retirees; the minimum age is generally 60 but may be as low as 55, compared with a minimum age of 67 for the HEAS.

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As you can see from the graph below, reverse mortgage users are using their funds for similar purposes to HEAS borrowers, with home improvement, debt repayment and car replacement the most popular. Travel also rates highly, especially for younger retirees in their 60s.

In practice, customers may use a reverse mortgage for one or several of these reasons rather than deplete their super.

As baby boomers progress through retirement, funding aged care will become a priority for many. Dr Hanewald says a reverse mortgage could be a good solution where one member of a couple goes into residential aged care while the other remains at home, so selling the home to pay an accommodation deposit is not an option.

A reverse mortgage may also be used to pay for home care services, to modify the home to make it easier to live in, or to pay someone to do the gardening.