John and Vera Hunt* are 75 and 69 respectively. They are self-funded retirees who own their own home outright. The home has been recently valued at $900,000. Their regular income from their investments is $2,820 per fortnight ($73,320 per year), however the recent hit to the share market means their income is greatly diminished, at least in the short term.

On top of this they both have long-term health conditions and private health insurance which add to their living costs. They also have a daughter who has recently lost her job and is struggling with mortgage repayments. John and Vera want to meet their health care costs, help their daughter and still have a quality retirement.

They decide to draw down $500.00 per fortnight ($13,000 per annum) to cover some of their private health costs and give their daughter help with her mortgage.

If they did this for 5 years, John and Vera would build up a loan of approximately $72,521 (including compound interest of $7,021). [If their home grew in value at 3 per cent p.a. after 5 years, they'd have net equity in their home of approximately $966,000].

If their investment income went up, they might want to reduce their Home Equity Access Scheme payment. They could also choose to stop the payment altogether if their situation changes.

Conversely, if they needed more income, they could increase their payment up to the maximum amount of 150 per cent of the pension.

This would ultimately affect the final amount they would owe in the future. They would need to think about this carefully and factor in the additional interest charged over the life of the loan until the estate was settled.

*Not their real names.