Page 8 - Wealth-Adviser-Issue-137 (FWP)

ISSUE 137
MAY 2026

good or bad in the abstract. It is whether extracting some without committing to a large loan balance that compounds
home equity makes sense given a household’s specific for decades. If the larger capital events materialise later, a
assets, longevity, care plans, bequest preferences, and the commercial facility can be revisited then.
alternatives available.
The alternatives matter. Downsizing releases home Worth Thinking About
equity without compounding interest but brings transaction A few questions to bring to your next adviser conversa-
costs (typically 5 to 7 per cent of the home’s value) and tion.
requires the homeowner to actually want to move, which • What is the gap between your liquid retirement assets
many don’t. Drawing super faster gets to the same liquidity and your home equity, and is it large enough that draw-
outcome but accelerates the depletion of a finite balance. ing some home equity would meaningfully change your
Working longer is another lever, with diminishing returns. lifestyle?
Reverse mortgages — including HEAS — sit alongside these • Which need is home equity being considered for — sup-
alternatives rather than competing with them. For a home- plementary income, a one-off capital event, a renovation,
owner whose home is worth four or five times their liquid an aged-care entry — and how soon is that need likely to
retirement assets, who values staying in the home, and who come up?
can identify the specific purpose the additional income or • For a couple, are you both on the title, and would the
capital is meant to serve, drawing some home equity is now proposed arrangement leave the surviving spouse appro-
a legitimate planning option. The traditional view that the priately protected?
home must be preserved at all costs deserves reconsider- • Have you considered HEAS specifically, and do you un-
ation in light of longer retirements and changing retirement derstand the income and lump-sum limits well enough to
balance sheets. know whether it would meet your purpose?
Where the traditional view still holds force is at the • If you are a part pensioner, have you modelled how the
extremes — for a homeowner with modest home equity proposed drawdown structure would interact with the
(say, under $500,000) where compounding bites harder and income and assets tests over time?
the buffer for unexpected aged-care costs is thinner; for a • Have you discussed the implications for any planned
homeowner with strong inheritance intentions and a family inheritance with the family members involved, openly
that depends on the bequest; and for a homeowner whose rather than in passing?
liquid retirement assets would, if carefully drawn down,
cover their needs without touching the home at all.
The Centrelink interaction matters for part pensioners in References
particular. HEAS payments leave the income test untouched, • Services Australia, Home Equity Access Scheme, page last updated
while commercial reverse mortgage proceeds held as cash September 2025.
will eventually affect the assets test through deeming. • Services Australia, Interest rate for loans under the Home Equity
Funds spent on the home itself (renovations, accessibility Access Scheme, 2026.
modifications) reduce assessable assets directly, because • Department of Social Services, Home Equity Access Scheme overview,
the home is exempt. The means-test logic itself is covered in current as at 2026.
Issue 131; the point here is that for a part pensioner near a • National Consumer Credit Protection Act 2009 (Cth) — Schedule 2
threshold, how the money is received and what it’s used for (reverse mortgage provisions, in force from 1 July 2012).
are pension-eligibility questions, not just budget questions. • ASIC MoneySmart, Reverse mortgage and home equity release.
For Margaret and David, the planning conversation • Department of Veterans’ Affairs, Home Equity Access Scheme,
would probably start at the modest, HEAS-shaped end of the updated March 2026.
spectrum: a fortnightly top-up of $400 or $500, with a small • UNSW Newsroom / The Conversation, “This little-known government
lump-sum advance for the roof, closing their immediate scheme can help retirees tap into $3 trillion of housing wealth”, April
income gap and funding the most pressing capital need 2026.

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