5.4.5 Review of Home Equity Access Scheme

Change in pension entitlement

Where changes in income, assets or pension entitlement occur as a result of a DVA or pensioner initiated review, the amount of the loan payments may need to be recalculated i to ensure that the total of the Home Equity Access Scheme (HEAS) payment and any actual pension entitlement does not exceed 150% of the maximum payment rate and that the HEAS rate is consistent with the participant's choice on how to set the HEAS rate.

Recalculation of loan payments is not required for pensioners who chose to receive a set rate as a loan subject to the total of their HEAS rate plus their new rate of pension not exceeding 150% of the maximum rate payable.    

Change in veteran or veteran's partner's age

The maximum loan amount is calculated using the veterans' age or the veteran's partner's age, whoever is younger. An amount based on age, called the age component amount, is used in the calculations of the maximum loan amount.

The maximum loan amount increases on each birthday taking into account the new age component and the latest valuation of the secured property.

Change to nominated amount

Home Equity Access Scheme participants can request to change their nominated amount by writing to DVA. The request must be signed by the veteran and, if they are a member if a couple, their partner.

A request to increase the nominated amount is subject to the pensioner remaining under the maximum loan applicable to their circumstances. An increase in the nominated amount requires a re-assessment of the loan to ensure that the value of the secured property is still sufficient. This may require a re-valuation of assets by a property valuation service provider.

Withdrawal from scheme

A request to withdraw from the Home Equity Access Scheme can be made at any time in writing to DVA and must be signed by the veteran and, if they are a member of a couple, their partner. Payments will cease from the pension payday after the request is made.

Revaluation of property/asset

Valuation of the real estate used as security on a Home Equity Access Scheme loan is conducted at the time of grant and each year following the grant. Property valuations are done by a property valuation service provider at no cost to the client.

If any changes are made that may impact on the value of the property, a revaluation may be required. For example, the creation of an easement, that limits the way part of the property can be used, will require a revaluation by a property valuation service provider.

A check should be made after each revaluation to ensure that the Home Equity Access Scheme participant has not exceeded their maximum loan and is still entitled to ongoing Home Equity Access Scheme payments.    

New borrowings made against the secured property

If a HEAS participant uses the secured property as security for another loan or changes the existing mortgage on the secured property, a review of the HEAS entitlement will need to be done. The participant is obligated to advise DVA as these could impact their loan.

Pensioner becomes a member of a couple

If a pensioner becomes a member of a couple, payment under the Home Equity Access Scheme is suspended until the new member of a couple signs a Home Equity Access Scheme application. When a new application form is signed by both members of the couple (even if the partner is not accessing the scheme) and continuing eligibility is established, the suspension is lifted and payment resumed to one or both members of the couple.

Separation of a couple

If a couple with a Home Equity Access Scheme loan separate, the payments should be suspended until a full review of the pensioner's circumstances is completed. The review needs to establish:

• whether any asset securing the loan is affected by any property settlement,
• what impact this may have on continuing eligibility for payment under the Home Equity Access Scheme, and
• what impact this has on recovery of the loan.

if the separation is permanent, and one member of the couple is no longer entitled to receive payments under the HEAS, the loan owed by that person may be recovered in part or in full:

• when property settlement occurs, or
• at an appropriate time dependent on the circumstances of the case.  

Example: A person who no longer qualifies because they are under pension age or have insufficent assets to secure the loan.

If the separation is permanent and both people wish to continue in the scheme, then each member of the couple will need to establish eligibility in their own right for payments under the HEAS.

Relocation of a HEAS participant

If the pensioner or pensioners decide to relocate and their principal residence is the secured property, the person's entitlement must be reassessed to decide whether it is appropriate to allow transfer of the charge to the new property. This depends on the value of the new property offered as security. There must not be a time gap between the sale of the old property and the purchase of the new property.

Portability of payments under Home Equity Access Scheme

Payments under the HEAS are not directly affected by portability rules.  However, for HEAS participants living outside Australia, the portability provisions may reduce the maximum payment rate under the rate calculators, which may result in a lower maximum fortnightly HEAS rate being available than to HEAS participants living in Australia.

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