You’ve spent decades building equity in your home. But now, as your financial priorities shift towards retirement, care needs or helping loved ones, it’s natural to wonder: can this wealth locked in bricks and mortar start working for you?
Equity release in Australia is gaining attention as a way to convert part of your home’s value into usable funds, without selling or moving. But with a variety of pathways, each with its own benefits and risks, how do you decide what’s right?
At Ausfirst Lending Group, we’ve put together this guide to unpack it all thoroughly, clearly and from the ground up. No matter if you’re just starting to explore your options or already weighing specific products, this guide is designed to give you the insight and practical detail needed to make choices with confidence.
Understanding Equity Release in Australia
At its core, equity release lets you access some of the value in your home without having to move out or sell it. Equity is the portion of your home you “own”, calculated as the property’s market value minus any outstanding mortgage.
Let’s say your home is worth $900,000 and your mortgage is $100,000. That leaves you with $800,000 in equity. Instead of leaving that untouched until you sell or pass away, equity release lets you access a portion of it now.
It’s not just for retirees. Depending on the product, equity release can suit Australians at different life stages. You might be reducing work hours, planning renovations, paying for aged care or looking to invest in another property.
The Five Main Ways to Release Equity in Australia
Equity release isn’t a one-size-fits-all solution. There are at least five common methods, each with different implications for your cash flow, lifestyle, and estate. Let’s walk through them:
1. Reverse mortgages – borrow now, pay later
This is the most familiar form of equity release. Reverse mortgages allow Australians aged 60 and over to borrow money secured against their home, with no regular repayments required. The loan (plus interest) is repaid when the home is sold, usually after you pass away or move into aged care.
What to Know:
- Minimum age: 60
- You can typically borrow 15–20% of your home’s value at age 60, increasing each year
- You remain the sole owner of your home
- Interest is compounded, and paid off when the loan ends
- Protected by a “negative equity guarantee” (you won’t owe more than your home’s value)
Key Considerations:
- Interest builds up quickly and may significantly reduce your estate’s value
- Could affect the Age Pension or aged care
- Not suitable if you plan to move within the short term
This is best for retirees seeking flexible funds without needing to move or make monthly repayments.
2. Home reversion schemes – share ownership, stay for life
Home reversion isn’t a loan. Instead, you sell a share of your property (usually 20–50%) to a provider in return for a lump sum. You stay in your home rent-free, and when it’s eventually sold, the provider receives their agreed share.
Benefits:
- No repayments or interest
- Guaranteed right to stay in the home
- Predictable exit terms
Trade-offs:
- You get less than market value for the portion you sell (typically 40–60%)
- Provider’s share grows as your home appreciates
- You don’t benefit fully from future capital gains
This may appeal to Australians who prioritise certainty, want to avoid debt, and have no intention of selling in their lifetime.
3. Equity release agreements (investor-backed models)
In this arrangement, you access funds today by selling a portion of your home’s future value to investors. These aren’t loans. You don’t pay interest, but you may pay fees or a form of “rental” return on the equity sold.
Features:
- Often structured as long-term contracts with growth-linked paybacks
- Investors may receive more than their initial share if property values rise
- Some models allow staged payments instead of a lump sum
What to Watch:
- The investor’s share may increase faster than expected
- Early exit can be difficult or expensive
- If your property declines in value, you may end up with less remaining equity than expected
This model is relatively new in Australia, but growing in popularity among homeowners comfortable with shared ownership and longer-term wealth planning.
4. Home Equity Access Scheme (HEAS) – Government-backed income stream
The HEAS is a federally managed scheme that lets eligible Australians of Age Pension age receive regular payments or lump sums by borrowing against their home. It’s structured as a low-interest loan, and offers substantial legal safeguards.
Highlights:
- Interest rate: 3.95% p.a., compounded fortnightly
- Available to homeowners of Age Pension age, even if they’re not receiving the pension
- Negative equity guarantee included
HEAS is particularly useful for retirees seeking modest, low-risk income top-ups to support ongoing living costs.
5. Home Equity Loans (Cash-Out Refinancing)
If you’re still working and meet lending criteria, a traditional home equity loan may suit. This works much like any standard mortgage. You borrow against your equity, make regular repayments and can use the funds as needed.
Requirements:
- Proof of income and serviceability
- Typically, you must retain 20% equity after the loan
- Ideal for homeowners under 60 or those seeking to invest
This is a flexible choice for those looking to fund renovations, consolidate debt, or expand their property portfolio.
Potential Risks and How to Navigate Them
Equity release is powerful, but it’s not risk-free. Make sure you understand:
- Interest compound growth: Reverse mortgages and HEAS loans grow quickly over time
- Inheritance impact: You may pass on less to beneficiaries
- Government entitlements: Additional assets or income could affect pension eligibility
- Contract complexity: Some agreements involve projections or fee structures that may be hard to fully understand without expert support
Tip: Always consult a licensed financial adviser and legal expert before committing to any equity release strategy. It’s not just about what you sign. It’s about what you fully understand.
Smart Uses for Released Equity
How you use your released equity is just as important as how you access it. Here are some of the most strategic and personally meaningful ways Australians are applying equity release:
1. Living more comfortably in retirement
If your Age Pension falls short, released equity can supplement your income. It can help cover groceries, medical bills or transport without dipping into your super.
2. Renovating or future-proofing your home
Upgrades like safer bathrooms, mobility-friendly spaces, or energy-efficient installations can increase your quality of life and even your home’s value.
3. Covering aged care or health services
From respite care to dental work or home modifications, equity can support the transition into later life without the stress of selling assets.
4. Supporting your children or grandchildren
Many Australians want to help loved ones while they’re still here to see the impact. Equity can fund a house deposit, pay for education, or back a small business.
5. Paying off debts
Rolling high-interest debts into a lower-cost facility can reduce monthly strain, but be sure to calculate your repayments and long-term cost carefully.
6. Property investment
Released equity may serve as a deposit on an investment property, offering new income streams or future capital growth.
7. Funding a milestone
Equity can be the key to a long-awaited family reunion, wedding celebration or travel experience, without sacrificing your financial security.
Are There Better Alternatives?
Equity release isn’t the only way to access funds. Here are a few alternatives worth considering first:
- Downsizing – Selling your house and moving into a smaller, lower-maintenance property may free up more equity, with fewer future costs
- Using super – Depending on your balance and preservation age, drawing from super could be more cost-effective
- No-interest loans – Available for essential items via some government and non-profit programs
- Budget or financial counselling – Could reveal new strategies to manage income more efficiently
Making the Right Choice for Your Future
Deciding whether to release equity comes down to more than just numbers. It’s about lifestyle, dignity, legacy, and the ability to enjoy life on your terms.
Here’s how to start:
- Clarify your goals. Do you need a steady income or a one-off sum? Are you looking to help family or fund care?
- Review your full financial picture. Include pension eligibility, debts, superannuation, and property value.
- Seek independent guidance. An experienced mortgage broker or adviser will help you navigate your choices.
- Talk to your family. Equity release can affect inheritance, so being transparent may help avoid future tension.
Your Home Can Do More Than Shelter You
Equity release isn’t about losing your home. It’s about gaining the freedom to use what you’ve built strategically, responsibly and on your terms.
If you’re thinking about unlocking the value in your property, don’t rush. Take your time, ask tough questions, and talk to experts who genuinely understand how equity release fits into the broader picture of your retirement and financial future.
Your next chapter deserves options, and your home equity might just be one of your strongest tools.
Ready to explore what’s possible? Let’s talk through your equity release options and find a path that fits your life, not just your loan.
Frequently Asked Questions (FAQs)
Yes. Funds accessed through equity release can count as income or assets under Centrelink means testing. This may reduce your Age Pension or other entitlements, depending on how much you release and how those funds are treated under the asset or income test.
Usually, yes. But there may be early repayment requirements or contractual complications. Some products allow you to transfer the loan to a new home, while others require repayment if you sell, so it’s important to understand the exit terms upfront.
Yes. Many equity release products are overseen by ASIC, and those issued after September 2012 must include a no-negative equity guarantee. This ensures you won’t owe more than what your home sells for, helping protect both you and your estate from owing more than the property is worth.
You’re not legally required to, but it’s highly recommended. Involving your family early helps manage expectations, encourages open communication and reduces the likelihood of disputes later on, especially if equity release will affect your estate.
Expect the process to take anywhere from 4 to 12 weeks, depending on the product and provider. This includes steps like property valuation, financial suitability assessments, legal advice, and cooling-off periods before settlement.
That depends on your age, the value of your home, and the type of product. For example, a reverse mortgage may allow you to access around 15–20% of your home’s value at age 60, with the percentage increasing as you get older.
You can release equity through a cash-out refinance or equity loan, using the funds as a deposit or to purchase outright. This is commonly done by homeowners with strong equity positions looking to invest or downsize while retaining property ownership.
When you pass away, your home is typically sold to repay the loan or fulfil the terms of the agreement. Once the loan has been settled, any leftover equity from the property sale is passed on to your estate and shared with your beneficiaries as outlined in your will.
