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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.    

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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.    

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

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