Budget 2021: Pension Loans Scheme widened
THE Pension Loans Scheme is the Australian Government’s own reverse mortgage scheme. The interest rate is lower than for commercial reverse mortgage. Up to now, the Pension Loans Scheme would only provide fortnightly top-ups to eligible retirees’ income.
However, from the 1 July 2021, the Pension Loans Scheme will also offer lump sum pay-outs. These will be limited to two per twelve-month period and those two withdrawals cannot exceed 50 per cent of the annual Age Pension single full rate.
CPSA’s position on any reverse mortgage, including those offered by the Australian Government is that these should only be taken out as a last resort. Reverse mortgages mean borrowing against your home and paying interest by borrowing more against your home.