Home Equity Conversion Agreement

Assessment of Income

Payments from a home equity conversion (HEC) agreement are not income. The first $40,000 of a HEC loan is exempt income under subsections 5H(4) and 5H(5) of the VEA, whereas any HEC loan amounts in excess of $40,000 are specifically exempt lump sums under subsection 5H(12) in the VEA.    

What is a home Equity Conversion Agreement

A home equity conversion (HEC) agreement is a mechanism which allows a homeowner to convert all or part of the equity locked up in their home into cash or a stream of income. A key feature of a home equity conversion agreement is that the loan (including interest) is generally not repayable until the homeowner moves out or dies.    

HEC agreements should not be confused with the sale leaseback agreements.