The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

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.

A home equity conversion agreement is different to a home equity loan, where the equity in the home is merely used as security to obtain a loan. Home equity loans provide for periodic repayments to enable repayment of the loan in full. Such loans do not anticipate that the home will be sold to allow repayment.

The AAT found in McDicken and Department of Family and Community Services (1999) AATA 169 that the definition of home equity conversion agreement does not apply to ordinary loan agreements requiring ongoing periodic interest payments, secured by a mortgage on the applicant’s principal home.

Note: A home equity conversion agreement is NOT income. The first $40,000 of a home equity conversion agreement is excluded as income by SSAct section 8(4) and section 8(5). Any amount over $40,000 is excluded as income by a section 8(11) determination, see Income exempt from assessment - s 8(11) exempt lump sums. 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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