Draw an Income From Your Home With Equity Release
Stay in the home you own and still have money coming in each fortnight. Equity release borrows against your NSW property with no repayments required while you live there, so the money arrives without a monthly bill to meet.
How the Debt Is Repaid
The balance is settled when the last borrower sells, moves permanently into aged care or dies, and it usually comes out of the sale proceeds.
Interest is added to the balance instead of being paid, so the debt compounds. A loan taken at 65 may run 20 years or more, and the balance can grow to several times the amount drawn. The gap between lenders widens every year the loan runs, and a Sydney mortgage broker can put those figures side by side before you choose.
A no negative equity guarantee means you never repay more than the home sells for, even if prices fall.
You stay on the title and keep the right to live there. In return you are required to keep the property insured, maintained and the rates paid.
Ways to Release Equity After 60
Three routes exist in Australia, and they differ on who lends, what it costs and how much you can take:
Reverse Mortgage
A reverse mortgage advances money against your home and adds the interest to the balance. Most lenders will not consider anyone under 60, and the share of the value you can draw rises with your age. Pricing sits well above standard home loan rates.
Home Equity Access Scheme
A government loan for Australians aged 67 or over who own Australian real estate, whether or not they receive the age pension. Services Australia charges 3.95% a year compounding fortnightly, and fortnightly payments are capped at 150% of the maximum age pension rate. You apply through Services Australia, or through the Department of Veterans' Affairs if you are a veteran, not through a broker.
Home Reversion
You sell a fixed share of your home's future value to a provider and keep living there. No interest accrues, though you give up that share of any growth. Availability is limited to one provider and to selected postcodes, and you deal with that provider directly.
How the Money Reaches You
The payment structure changes how quickly the balance grows:
Lump Sum
The full amount is drawn at settlement and interest runs on all of it from the first day. It suits a one-off cost such as a home modification or clearing an existing mortgage.
Fortnightly Income
Smaller amounts are paid over time and interest runs only on what has been drawn. The balance grows more slowly than an equivalent lump sum taken upfront.
Cash Reserve
An approved amount stays available with no drawdown schedule, and you take from it when a cost arrives. Nothing is drawn until you ask, which suits bills you cannot predict.
Who Equity Release Suits
It suits owners who do not intend to move again and who hold most of their wealth in home equity instead of in super or savings.
Owners under 60 are usually better served by borrowing against the property in the ordinary way and making repayments, which our equity loan broker page covers.
It suits fewer people where a move is likely within a few years, since the establishment costs are then recovered over a short period, or where the home is the main asset intended for someone else. Where that is your position, we will say so on the first call.
What Lenders Require Before Approving
Approval turns on your age and the property more than on your income:
Minimum Age
Most lenders set 60 as the floor, and the Home Equity Access Scheme sets 67. The share of value available rises with age, so a 75-year-old can draw more than a 65-year-old on the same property.
Property Type
Standard houses and units in established areas are accepted. Rural acreage, retirement village units and properties carrying title restrictions are commonly capped or declined.
Retained Equity
Lenders require a portion of the value to stay untouched so the debt stays inside the value over time. Any existing mortgage must be cleared from the proceeds at settlement.
Independent Legal Advice
You are required to get your own legal advice before signing, usually at your cost. Building it into the timeline early keeps it from holding up settlement.
How the Process Runs
Timing depends on the lender and on how quickly legal advice is arranged, though six to eight weeks is common:
Running Your Projections
We work through what the balance would look like at 10, 15 and 20 years, using the reverse mortgage calculator published by the Australian Securities and Investments Commission. A lender or broker is required to run those projections with you before a reverse mortgage proceeds, and you keep a copy of the results.
Comparing Your Lender Options
We check your age, your property and the amount you want against each lender's policy. You are asked for identification, the title details and a recent rates notice. Pricing, the share of value available and the fee structure all differ between them.
Arranging Your Legal Advice
You see your own solicitor and we supply the documents they need to review. Some lenders require a signed certificate from that solicitor before they will proceed.
Settling Your Loan
Funds are released once the lender holds your signed documents. Your first statement shows the balance and the interest added to it.
The first meeting is about the numbers, not an application.
What It Costs and How We Are Paid
Expect an establishment fee, a valuation fee and your own legal costs at the start. Ongoing fees vary between lenders, though the interest rate is the cost that matters most over time.
On a lender-funded loan we are typically paid a commission by the lender that settles it. Where a fee is payable by you, we put it in writing before anything is signed.
What It Means for Your Pension and Your Estate
Home Equity Access Scheme payments are exempt from the age pension income test, though money you hold in an account can still count under the assets test. Check your own position with Services Australia or a financial adviser before drawing a large amount.
What is left for your estate is the value of the home less the balance owing on the day it is sold. Telling the people who would inherit before you sign keeps that conversation from happening at a point when you can no longer explain the reasoning.
Why NSW Retirees Work With Us
Our panel runs to more than 40 lenders, and we are owned by none of them, so the comparison starts with your age and your property instead of with one lender's product.
DIY Lending is a Corporate Credit Representative of Finsure Finance & Insurance Pty Ltd, Australian Credit Licence 384704. We are a member of the Mortgage and Finance Association of Australia and of the Australian Financial Complaints Authority (AFCA). AFCA is where a complaint goes if we cannot resolve it with you.
Know What Equity Release Would Leave Behind
The question is rarely whether the money would help. It is whether the home still passes to the people you intend it for, and how much of it survives 15 or 20 years of compounding interest. Projections answer both before you commit to anything. Call 02 8806 7258 or send your details through, and we will run them for a property anywhere in NSW.
Frequently Asked Questions (FAQs)
Can I lose my home?
Not while you meet the loan conditions and live there as your main residence. The lender's security is repaid when the home is eventually sold.
How old do I have to be?
Where a couple applies, lenders generally work from the age of the younger person, so the younger partner sets what is available. The minimums differ by route, at 60 with most lenders and 67 for the Home Equity Access Scheme.
Will it affect my age pension?
It can, depending on what you do with the money and how much you draw. Services Australia assesses your circumstances, so confirm your own position with them before committing to an amount.
What happens if I move into aged care?
The loan generally becomes repayable once the last borrower has left the home permanently, and it is usually settled from the sale. Some lenders allow a period before repayment is required, so the terms are worth checking before you sign.
Can I still leave the home to my children?
You can leave whatever equity remains after the balance is repaid. Because the debt compounds, that share shrinks over time, which is what the projections show.
What does it cost to find out what I could draw?
Nothing, and it does not commit you to applying. You leave with projections showing the balance at several points in the future and the options that fit your age and property.
This page contains general information only. It does not take your objectives, financial situation or needs into account, and it is not a recommendation to enter into any credit contract. Figures, thresholds and lender requirements change, and the outcome for your situation depends on your circumstances and the lender assessing you. You may wish to speak with a qualified professional before acting on anything here.