1.1.H.70 Home equity conversion agreement


This definition applies to all payments under the SSAct, except DOP.


A home equity conversion agreement (loan) is a mechanism which allows a homeowner to convert all or part of the equity locked up in their home into cash or a stream of income. A key feature of a home equity conversion agreement is that the loan (including interest) is generally not repayable until the homeowner moves out or dies.

The SSAct has a much wider definition of a home equity conversion agreement. The AAT found in McDicken (1999) that to read the definition literally would give an absurd result.

Note: A home equity conversion agreement is NOT income.

Home equity conversion agreements should not be confused with sale leaseback agreements.

Information on the assessment of home equity conversion loans under the assets test is in

Act reference: SSAct section 8(1) Income test definitions, section 12B Sale leaseback definitions, section 1118(1) In calculating the value of a person's assets …, section 1118(1)(e) any amount that is: …

Policy reference: SS Guide Income exempt from assessment - specifically approved, Home equity conversion agreement, Assessing Sale Leaseback Residences

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