Home equity release

Using the equity in your home

If you are over 60, own your home and need some extra cash, using the equity in your home is one option available to you.

However, using your home equity is a big step. Your home is probably your most valuable asset so you must work out whether the benefits outweigh the risks. Always seek financial advice before you make a decision.

If you only need small regular amounts to top up your age or veteran's pension, check out the Pension Loans Scheme offered by the Department of Human Services and the Department of Veterans' Affairs. The interest rate is significantly lower than commercial equity release products.

When home equity release might be suitable

Using your home equity may be suitable if:

  • You want a small amount each year to supplement your income and you can afford to do this for many years (most products)
  • You need a lump sum for home maintenance or renovations so you can stay in your home
  • You want money for a critical need e.g. medical treatment
  • You need a loan to secure aged care accommodation until you sell your home

Even though home equity release might be suitable to people in some circumstances, keep in mind that it is a long-term commitment and you need to know all the risks.

When home equity release is NOT suitable

Using your home equity may NOT be suitable if:

  • You are spending much more each year than you can afford for the long term (a better solution may be to bite the bullet and do some serious budgeting using our budget planner)
  • You want to give or lend money to your family (it may affect your pension and you may need the money in the years ahead)
  • The debt could eat into money you need in the future for medical bills, aged care or home maintenance
  • You are thinking of investing - because you would be risking your entire home, not just the portion you are investing

Budget planner


You may come across companies that offer you an income stream in return for the capital growth on your home (a property option).

While the cashflow may look attractive now, the income you receive will probably be much lower
than the capital appreciation of your home, that you are forgoing. These types of offers are unlikely to be covered by credit or financial services laws, meaning you will not have access to important consumer protections such as free external dispute resolution.

Types of home equity release

Typically, there are two types of equity release products:

Equity release products should not be entered into lightly. Consider your future needs and speak to your family and obtain financial and legal advice before proceeding.

Related links

Last updated: 24 Aug 2015