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Management and Maintenance of Home Equity Access Scheme Loans
Decrease in loan rate - assets tested pensioners
The amount owed by a person under the Home Equity Access Scheme is deducted from the value of the assets held as security against the loan. If the assets held as security are assessable under the assets test, the person's pension entitlement under the assets test increases as the amount is deducted from the value of those assets. As the person's pension entitlement increases, their fortnightly loan rate may decrease depending on how they have set their Home Equity Access Scheme rate.
Any exempt assets used for security do not affect the loan rate in this way, as the reduction in the value of an exempt asset has no impact on the assets test.More →
Members of a couple
Members of a couple may nominate different loan rates or only one member of a couple may apply for Home Equity Access scheme. These loans are not joint loans but individual loans to each member of a couple and are paid off separately.
Interest charged on the Home Equity Access Scheme loan
Interest under Home Equity Access Scheme is charged at a rate set by the Minister for Social Services by notice in the Australian Government Gazette.
. The rate is currently 3.95% per annum, compounding fortnightly, and is reviewed periodically.
Interest is calculated on the outstanding balance, owing each fortnight, of:
- combined loan payments and accrued interest, less
- any repayments made by the pensioner.
Interest will accrue on the outstanding balance until the loan has been repaid in full by the participant or their estate. Any legal costs associated with establishment of the loan do not attract interest, and will just be added to the outstanding loan amount to be repaid.
|Date of effect||Interest rate|
|1 January 2022 to present||3.95%|
|1 January 2020 to 31 December 2021||4.50%|
|25 December 1997 to 31 December 2019||5.25%|
|20 March 1997 to 24 December 1997||6.25%|
|10 July 1996 to 19 March 1997||7.90%|
|1985 to 10 July 1996||10%|
Deduction of repayments from balance
If a loan repayment is made, that repayment is deducted from the balance of the loan on the pension payday immediately prior to the date the repayment is made. If repayment is made on a payday, that repayment is deducted from the total loan balance before interest is calculated for the payday on which the repayment was made.
Assessment of assets
Chapter 9.1 Income and Assets Test Principles
An exempt asset is one that is disregarded when calculating the value of a person's assets under the assets test. Examples of exempt assets include:
- the value of a person's principal home,
- any motor vehicle provided under the Vehicle Assistance Scheme,
- the value of any medal or decoration awarded for valour, other than used as an investment or hobby,
- up to two funeral bonds where the combined amount invested is within the funeral bond threshold,
- a prepaid funeral or cemetery plot
- value of a superannuation fund investment prior to pension age.
For a full legislative definition see section 52 of the VEA.