Pension Loans Scheme

A voluntary reverse equity mortgage that offers older Australians an income stream to supplement their retirement income.

Eligibility & payment rates

About the scheme

You can apply for a non-taxable loan if you need extra income or help for either a short time or an indefinite period. There is no lump sum.

If we grant your application, we’ll pay the loan to you fortnightly. You can choose the amount of the fortnightly loan, up to the maximum rate of pension.

If you already get the maximum rate of pension we cannot make any loan payments to you.

You can request us to stop your loan payments any time.

Who can get it

You may be able to apply for payments under the Pension Loans Scheme if you:

  • or your partner are of age pension age
  • own real estate in Australia that you use as security for the loan
  • or your partner receives a rate of payment that is less than the maximum amount or nothing due to either the income or assets test but not both
  • you meet Age Pension residence rules

If you get less than the maximum rate of any of the following payments you can apply for a loan:

You can’t access the scheme if you get the maximum rate of payment.

Claiming other payments

The Pension Loans Scheme doesn’t stop you from claiming payments under the assets hardship provisions.

However you need to work out which one suits you best as you can only get a payment under either the Pension Loans Scheme or the asset hardship provisions.

Costs and interest rate


You must pay any costs associated with setting up the loan. Costs can include legal fees.

We’ll send you a letter once the loan has commenced. This letter will tell you the costs you must pay. You can pay them straight away or we can add them to your outstanding loan balance. If we add them to the loan balance they will attract interest charges.

Interest rate

We currently charge 5.25% compound interest on the outstanding loan balance.

We add interest to the outstanding loan balance each fortnight until you repay the loan fully. The longer you take to repay the loan, the more interest you pay.

The outstanding loan balance is:

  • the amount you borrow from us, plus
  • interest, plus
  • any costs, minus
  • any repayments you made

We regularly review your loan payments.

Repay the loan

You can repay the loan in part or full at any time.

If you want to sell the property used as security for the loan, you need to contact us first. You can either transfer the loan to another property including your new home or you can repay the loan on the date of settlement.

If there is an outstanding loan after your death, your estate or in some cases your surviving partner’s estate can make repayments.

How much you get

The amount you get each fortnight can be up to the maximum rate of income support payment you qualify for.

The total loan you can get depends on the:

  • equity you have in the property you offer as security
  • equity you want to keep in your property, and
  • age of you or your partner, whoever is younger

Loan payments are not taxable.

Security of the loan

You must use real estate in Australia as security for your loan.

It can be the home you live in or an investment property.

You may also use real estate owned by a private company or trust as security for the loan, if you’re a controller of that company or trust.

If you have more than one property, you can choose which to use as security for the loan.

We’ll register a charge with the Land Titles Office on the title deed of the property you’re using as security. You’ll have to pay any costs associated with registering and removing this charge.

A licensed valuer will value the property. There will be no cost to you.

Don’t forget that the loan payment reduces your equity in the real estate used as loan security.


Check if you’re eligible before you start your claim.


  • find out what you need
  • fill in your claim form
  • meet with a Financial Information Service officer
  • submit your claim form and the other documents we ask for
  • we will assess your claim and let you know the outcome


Managing your payment

Change of circumstances

You must tell us if your circumstances change in case they impact your loan. For example, you must tell us if you sell the property you used as security for the loan.

If you don’t tell us when changes happen, you may be doing the wrong thing.

How and when to tell us

The easiest way to tell us about changes is through our self service options.

You need to:

  • tell us within 14 days of the change
  • make sure your details are current in myGov

It’s never too late to report a change.

If you don’t tell us

If you don’t tell us about changes, we may pay you too much. If this happens you’ll have to pay the money back plus a fee.

If you don’t tell us about changes on purpose, you could be committing fraud.

Read about how to avoid committing fraud.

My bank account is overdrawn

You can get help to manage your money if your bank account is overdrawn.

Read more about what to do if your account is overdrawn


Make an informed decision

We offer a free Financial Information Service (FIS).

Before you submit your claim, you must meet with an FIS officer. They'll tell you what to consider if you want to apply for the scheme.

To speak to a FIS officer call the FIS line.

Payment and Service Finder

Find, estimate and compare payments and services you may be eligible for. You can also work out what a change in circumstance might mean for the payments and services you currently receive from us.

Start using Payment and Service Finder

Manage your money


We’ve got advice and tools to help you with budgeting, borrowing and credit, and managing debt.

Read about how to manage your money.

Related payments and services

Page last updated: 27 August 2017