Key Takeaways
- A reverse mortgage and the Home Equity Access Scheme (HEAS) both use property equity as security, but one is private lending and the other is an Australian Government loan.
- HEAS can provide fortnightly payments and limited advances, while reverse mortgage access depends on lender criteria, borrower age, property value and available equity.
- The amount you need, when you need it and how long the debt may remain outstanding can change the comparison.
- Both options can increase debt against your property over time, which may reduce the equity available for a later move, care costs or an estate.
You may own most or all of your home, want to stay in it and still need extra cash for living costs, home repairs or a larger one-off expense. That is where a reverse mortgage vs home equity access scheme comparison becomes practical.
A reverse mortgage is a private lending product secured against your home. The Home Equity Access Scheme (HEAS) is an Australian Government loan with separate eligibility, payment and borrowing rules.
A reverse mortgage broker can explain how current private-lender criteria may affect the amount and access options available. HEAS applications are made through the government process.
The decision turns on what you need the money to do, whether you meet the relevant rules and how much home equity you want to keep available for later needs.
Key Differences Between Reverse Mortgages and HEAS
Reverse mortgages and HEAS both use property equity as security, but they differ in who provides the loan, who can access it and how money can be received:
Lending Structure
A reverse mortgage allows you to borrow against the equity in your home through a private lender. The amount available typically depends on factors including your age, property value and the lender’s policy.
Regular repayments are generally not required while you continue living in the home and meet the loan conditions. Interest is added to the amount owing, so the balance can grow over time.
The loan is commonly repaid when the home is sold, you move out or the property is sold by your estate.
HEAS is an Australian Government loan that allows eligible older Australians to supplement retirement income using equity in Australian real estate as security.
Eligibility Requirements
Reverse mortgage eligibility depends on the lender’s current criteria. Age and the property offered as security may affect how much can be borrowed.
For HEAS, either you or your partner must be Age Pension age or older. You must also receive, or be eligible to receive, a qualifying pension and you or your partner must own Australian real estate that can be offered as security.
An applicant under Age Pension age may still be eligible in certain circumstances where their partner has reached Age Pension age and the applicant is eligible for Carer Payment or Disability Support Pension.
You may also meet the pension requirement when the relevant pension rate is zero because your income or assets are above the payment threshold. Other HEAS conditions include requirements relating to bankruptcy, personal insolvency arrangements and insurance over the secured real estate.
Payment Access
Depending on the lender and product, a reverse mortgage may allow a lump sum, regular payments, a line of credit or a combination.
HEAS allows a fortnightly loan amount, an advance payment or a combination of both. Under current rules, the combined pension and HEAS payment for someone receiving a pension cannot generally exceed 150% of the maximum rate of the qualifying pension each fortnight.
Someone who qualifies for a pension but receives no pension payment may receive a fortnightly HEAS loan amount of up to 150% of the maximum rate of the qualifying pension, subject to the other scheme limits.
Interest Structure
Reverse mortgage rates and fees depend on the lender and loan terms.
As at September 2026, the HEAS interest rate is 3.95% per annum. Interest compounds each fortnight on the outstanding balance until the loan is repaid in full.
The rate alone does not determine the overall cost. The amount borrowed, fees, timing of drawdowns and length of time the debt remains outstanding can also affect the balance.
Reverse Mortgage and HEAS Comparison
A reverse mortgage generally offers lender-specific access options, while HEAS follows government-set payment and borrowing rules:
| Comparison Point | Reverse Mortgage | Home Equity Access Scheme |
|---|---|---|
| Provider | Private lender | Australian Government |
| Eligibility | Depends on lender criteria | Subject to government-set eligibility conditions |
| Security | Property acceptable to the lender | Equity in Australian real estate |
| Payment options | May include a lump sum, regular payments, line of credit or combination | Fortnightly amount, advance payment or combination |
| Amount available | Depends on factors including age, property value and lender policy | Subject to payment rules and the maximum loan amount |
| Interest | Set under the lender’s product terms | 3.95% per annum as at September 2026 |
| Interest treatment | Interest typically compounds | Compounds fortnightly |
| Regular repayments | Generally not required while living in the home, subject to loan terms | Part or full repayments can be made at any time |
| Negative equity protection | Applies to reverse mortgages taken out from 18 September 2012 | No negative equity guarantee applies, subject to stated exceptions |
| Main access constraint | Lender criteria and borrowing limit | Eligibility, payment limits and maximum loan amount |
These figures and rules are a general guide based on information current in September 2026. HEAS rules and interest rates may change, while reverse mortgage terms vary by lender and product.
How Funding Needs Change the Comparison
The amount, timing and pattern of the borrowing can change which structure is more practical. The main funding needs to compare are:
Ongoing Retirement Income
HEAS is structured to supplement retirement income through fortnightly loan payments. An eligible participant can choose the maximum available amount, a smaller percentage or a fixed loan amount, subject to the scheme limits and maximum loan amount.
A reverse mortgage may also provide regular payments where the lender offers that structure. The comparison then depends on how much is required, the product terms, interest and the expected loan period.
One-Off Expenses
HEAS can provide an advance payment, subject to separate advance limits. A one-off need might include home modifications, substantial repairs or another planned expense.
The required amount and payment timing matter. A reverse mortgage could provide access to a larger lump sum where the borrower meets the lender’s criteria and has sufficient borrowing capacity.
Large Lump Sums
HEAS does not provide unrestricted access to a large share of home equity in one payment.
Under current government rules, advances can total up to 50% of the maximum annual rate of the qualifying pension within a 26-fortnight period. No more than two advance payments can be made within that period, and an advance may reduce the fortnightly loan amount available for 26 fortnights.
A reverse mortgage could provide a larger lump sum, depending on the lender’s borrowing limit and the borrower’s circumstances. Interest would generally accrue after the funds are drawn.
Staged Expenses
Some expenses arise progressively through scheduled payments or changing needs.
A reverse mortgage with progressive drawdowns may allow funds to be accessed when required. HEAS participants can also adjust their fortnightly loan amount under the scheme rules.
Drawing funds closer to when they are needed could reduce the period over which interest accrues, depending on the arrangement.
Financial Buffer
A homeowner may want access to funds for future expenses without drawing the full amount immediately.
For a reverse mortgage, the availability and treatment of staged access depend on the lender and product. With HEAS, a participant may choose a lower fortnightly amount, change or stop payments and select a maximum loan amount below the calculated maximum.
Loanworx Group’s broader guide to equity release options covers other structures that may be relevant where neither option matches the intended funding pattern.
Eligibility Rules for HEAS and Reverse Mortgages
Eligibility needs to be checked before rates or payment features are compared because HEAS and reverse mortgages apply different requirements:
Age and Pension Eligibility
For HEAS, either you or your partner must be Age Pension age or older and you must receive or qualify for a qualifying pension.
Where the applicant has not reached Age Pension age, different conditions may apply. Current government guidance allows eligibility in some cases where the partner has reached Age Pension age and the applicant is eligible for Carer Payment or Disability Support Pension.
You may also qualify where the relevant pension payment is zero because of income or assets, provided the other requirements are met.
The way borrowed funds are later held or used may also affect pension means testing in some circumstances. Loanworx Group’s guide to reverse mortgage pension effects explains how released funds may interact with pension assessment.
Property Security Requirements
HEAS requires equity in Australian real estate to be offered as security. Adequate and appropriate insurance is also required. Coverage equivalent to at least 90% of the value of the buildings on the property is currently treated as adequate.
Reverse mortgage lenders apply their own property criteria. Location, property characteristics, valuation and lender policy may affect whether a property is accepted as security.
Partner and Co-Owner Rules
Current HEAS rules require a partner to agree to an application. Bankruptcy or a personal insolvency agreement involving the applicant, their partner or a relevant co-owner may affect eligibility.
Where a participant has a younger partner, the younger partner’s age is used when the HEAS maximum loan amount is calculated.
Reverse mortgage requirements for joint owners depend on the lender, loan terms and ownership structure.
Reverse Mortgage Lending Criteria
Reverse mortgage lenders may apply minimum-age requirements and limits on the proportion of property value that can be borrowed. The property must also satisfy the lender’s current security criteria.
Product availability and lender criteria can change, so any potential borrowing amount depends on the lender assessment and property valuation at the time of application.
How Borrowing Limits Work
Home equity does not equal borrowing capacity because reverse mortgage lenders and HEAS apply different limits. The main factors are:
Reverse Mortgage Borrowing Limits
Reverse mortgage borrowing limits commonly increase with borrower age, although the amount available depends on current lender policy.
Property value and the treatment of joint borrowers can also affect the result. A current lender assessment and property valuation are needed before an estimate can be relied on.
HEAS Maximum Loan Amount
HEAS has a maximum loan amount (MLA), which is the maximum balance that can be borrowed through the scheme. Further loan payments stop when the balance reaches the MLA, although interest continues to accrue until the debt is repaid.
The MLA is based on the participant’s age or, where there is a younger partner, the younger partner’s age, together with the value of the equity offered as security.
The security value is rounded down to the nearest $10,000, divided by $10,000 and multiplied by the relevant age component amount. The age component increases as the participant or younger partner gets older, while a change in the value of the secured real estate may also affect the MLA.
The MLA is separate from the rules governing how quickly funds can be received. A participant could have an MLA that accommodates a proposed amount while still being restricted by the fortnightly payment or advance rules.
Property Value and Borrowing Capacity
Property value is an input into borrowing capacity, not an automatic entitlement to borrow the same amount.
A reverse mortgage lender may restrict borrowing to a proportion of the property value under its current product rules. For HEAS, the amount of equity offered as security affects the MLA.
Reserved Home Equity
Borrowing the maximum available amount is not compulsory.
HEAS participants may choose an MLA below the calculated maximum and may nominate an amount of equity to exclude from the calculation. A reverse mortgage borrower may similarly choose to borrow less than the amount a lender is prepared to offer.
Borrowing less could reduce the amount on which interest accrues and leave more equity available for later needs, depending on property values and the loan terms.
How Interest Affects the Equity You Keep
Both options create debt secured against property. Where interest is capitalised, the balance can increase over time. The effect depends on the rate, compounding, timing and repayment pattern:
Interest Rate Structure
A reverse mortgage rate is set under the lender’s terms and may change. Fees may also apply, depending on the product.
The HEAS rate is 3.95% per annum as at September 2026, with interest compounding fortnightly. The government-set rate may change in future.
Compound Interest Growth
Compound interest can apply to previously accumulated interest as well as the original amount borrowed. A reverse mortgage held for many years may therefore increase in balance even where no further funds are drawn. HEAS also compounds interest on its outstanding balance each fortnight.
Loanworx Group’s guide to reverse mortgage costs covers compound interest and drawdown considerations in more detail.
Drawdown Timing
Borrowing $60,000 at once and drawing smaller amounts progressively can produce different interest outcomes even where the same total is eventually borrowed.
Money drawn earlier generally has longer to accumulate interest. Progressive access could therefore reduce interest compared with drawing the entire amount upfront, depending on the rate, fees, timing and product terms.
Voluntary Repayments
Current HEAS rules allow the loan to be repaid in part or in full at any time. Participants can also stop future loan payments while an existing balance remains outstanding.
Voluntary repayment arrangements for a reverse mortgage depend on the loan contract, including any applicable fees or conditions.
Remaining Home Equity
A loan can reduce positive equity without reaching negative equity. Lower remaining equity could affect funds available for a later home purchase, aged care or an estate.
Property values may rise or fall, so future growth should not be treated as certain when considering how much equity might remain.
Future Equity Protections and Consequences
Beyond interest growth, the remaining effects on home equity depend on the protections that apply, future housing needs and the value left in an estate:
Negative Equity Protection
Reverse mortgages taken out from 18 September 2012 have negative equity protection under Australia’s reverse mortgage framework. This generally means the borrower cannot be required to repay more than the relevant value of the home, subject to the applicable legal requirements.
HEAS also has a no negative equity guarantee. Under current government rules, a borrower or their estate generally does not have to repay more than the market value of the secured property after other mortgages or legitimate claims are taken into account.
The HEAS guarantee may not apply in some circumstances, including certain increases to mortgages or other encumbrances, misrepresentation or fraud.
Neither protection preserves a particular level of positive equity. The debt may still substantially reduce the amount of equity remaining.
Future Housing Choices
Remaining equity may affect the funds available if you later move closer to family, buy a more accessible property or fund another living arrangement.
For example, selling an $800,000 property with no secured debt produces a different net position from selling an $800,000 property with a $200,000 secured loan balance, before allowing for other sale costs or liabilities.
The example illustrates the effect of debt only. Actual property values, balances and transaction costs will vary.
Estate Value
Both arrangements may reduce the value remaining in an estate.
When the property is sold, the outstanding loan, accumulated interest and applicable costs are dealt with under the relevant loan or scheme rules. How much remains depends on the property value at that time, the outstanding balance and other claims against the property.
What Questions Should You Ask Before Choosing?
These questions can help frame a comparison between HEAS and a reverse mortgage:
- How much do I need? Start with the expense or income shortfall, not the maximum available equity.
- Do I need regular payments or an upfront amount? HEAS provides fortnightly payments and limited advances, while reverse mortgage products may offer different drawdown structures.
- Could I meet the HEAS eligibility rules? Eligibility depends on current pension, age, property, insurance and other scheme requirements.
- Would the HEAS payment limits cover the intended amount? Eligibility does not mean any amount can be received immediately.
- How long might the balance remain outstanding? A longer period can give compound interest more time to increase the debt.
- How much equity do I want to retain? Future housing, care costs and estate plans may affect how much borrowing feels appropriate.
- What could happen if my circumstances change? Selling the property, changing the security, drawing more funds or repaying the debt can affect the arrangement.
These questions are a general guide only. Eligibility, available loan amounts, costs and payment structures depend on current scheme rules or lender requirements and the borrower’s circumstances.
Clearer Reverse Mortgage or HEAS Choice
Once the amount, timing and purpose of the borrowing are defined, the difference between the two options becomes easier to judge. HEAS may fit a need for government-set fortnightly payments or an advance within scheme limits. A reverse mortgage may allow different drawdown structures where lender criteria are met.
The remaining question is how each option would affect your own property equity over the time you expect to hold the debt. That comparison can be made using the amount you actually need, not the maximum either structure might allow.
If you are weighing up a reverse mortgage against the Home Equity Access Scheme, the team at Loanworx Group can talk you through the lending options that may suit your circumstances.
Frequently Asked Questions (FAQs)
1. Can I switch from HEAS to a reverse mortgage later?
Potentially. An existing HEAS debt and its security would need to be considered in any later reverse mortgage application.
The lender would assess the application under its criteria at that time, including the property, available equity and existing liabilities.
2. Can I have HEAS and a reverse mortgage at the same time?
It may be possible in some circumstances, but existing mortgages, reverse mortgages and other liabilities over property offered as HEAS security can affect the arrangement.
Any proposed reverse mortgage would also be subject to the lender’s security requirements and available equity. The two arrangements cannot be assumed to coexist in every case.
3. Does HEAS mean the government owns part of my home?
No. HEAS is a loan secured against equity in Australian real estate. It does not transfer a share of the property to the government.
The loan balance, interest and applicable costs remain a debt to the Commonwealth until dealt with under the scheme rules.
4. What happens to HEAS if I sell my home?
Current HEAS rules allow the loan to be transferred to another property, including a new home, where the applicable requirements can be met. Alternatively, the loan can be repaid in full on settlement.
The government needs to be notified before the property used as security is sold so the loan and security arrangements can be dealt with.
This content provides general information only and does not take your objectives, financial situation or needs into account. You may wish to speak with a qualified financial, legal or credit professional before acting.
