A new options paper by the federal Department of Health has outlined a new system that, if implemented, would enable Australians to use their own home equity to fund any small-scale renovations needed to keep living in their own home for as long as possible.

Such funds could be used to install ramps, handrails, and other amenities that deliver greater accessibility to our homes, making them age-friendly.

Recently in an interview with Josh Szeps on ABC Radio Sydney, National Seniors Australia’s Chief Advocate Ian Henschke talked about the value a scheme like this can deliver to older Australians. It was an information-rich conversation, revealing, among many things, that a similar scheme is actually already in place and can be accessed already. You can listen to the full half-hour conversation on the ABC website, or your can read on for the main points raised during the chat.

Former Prime Minister Paul Keating proposed a home equity scheme when addressing the Royal Commission into Aged Care Quality and Assurance back in 2020. He framed the proposal as an option for older Australians: “We’re not forcing anyone out of their home in old age. We’re not obliging aged persons to negatively mortgage their home. We’re not asking members of families to chip in and pay for their families.

Ian Henschke backed up the proposal as a “practical, sensible solution.” He explained “Mr Keating was talking about the fact that many people are millionaires thanks to the value of their home, although they don't have a million dollars in the bank. He went on to say you can get some assistance from a government-funded home care package, but you may need some extra money. So use the equity in your home as a way of topping that up.”

Home equity programs are not the solution for everyone, but they are an option for those who are restricted in their ability to fund vital improvements that can keep them living in their home for longer.

The good news for seniors who are interested in home equity schemes is that most seniors do own their own homes and can make use of these sorts of programs.

Ian Henschke explained “National Seniors Australia deals in evidence-based research. We’ve done our research. Well above 90 per cent of older Australians want to stay in their own home. How many of them own their own homes? About 80 per cent of 80 year-olds own their own homes.”

With the rising prices of homes across Australia, many seniors who bought homes at a relatively inexpensive price when they were younger are now in a position where they are millionaires on paper, with homes valued at over a million dollars.

Did you know that the federal government already operates the Home Equity Access Scheme? It lets older Australians get a voluntary non-taxable loan at a rate of 3.95 per cent.

To access the scheme:

• You need to be an Australian citizen.
• You must be of pension age.
• You must own a home or property (this does not need to be a home that you live in).

This can be accessed through Centrelink.

One of the problems with the Home Equity Access Scheme, according to Ian Henschke, is that people don’t know about it.

“Most older Australians don’t know,” Ian said. “The government has policies, but doesn’t actually tell people, because they expect people to go onto the Internet.

“I was talking to a 94-year-old lady who lives on the north shore in Sydney and she had no idea about it.

“National Seniors is here telling people what the government should have told them. A couple can borrow $57,000 a year if they’re self-funded retirees. A pensioner can get half as much as their pension again. This can make a real difference to people’s lives.”

For those who do access the government’s scheme, the loan repayments begin when the recipient dies and becomes a probate issue as an estate is settled. That shouldn’t be a concern for those who need to access the Home Access Equity Scheme. After all, as Ian explained: “It is your money, your house. It would be the same as if you died and had money to pay out on your mortgage”.

Ian delivered some really great, practical advice for anyone wanting to find out more about the scheme at Centrelink but aren’t comfortable accessing the information on the Internet: go to Centrelink and make an appointment to meet with someone in person.

“At Centrelink there are people called Financial Information Services Officers,” he advised. People should take advantage of the face-to-face meeting. Book an appointment, go down there and do it. When people deal with each other face-to-face they deal with each other better.”