Calculating the maximum HEAS loan


The maximum loan available under the HEAS (formally known as the PLS) to a person depends on:

  • the value of the real assets offered as security for the loan, minus any nominated amount (1.1.N.78), AND
  • their age, OR
  • the age of the younger partner in the case of members of a couple (1.1.M.120).

These points are explained in the rest of this topic.

Calculating the maximum loan

The maximum loan available is calculated using the following formula:

  • Age component amount × (value of real assets ÷ 10,000)

Value of real assets

The value of a person's real assets (1.1.R.15) is always rounded down to the nearest multiple of $10,000. If the value of real assets is LESS than $10,000, the value is taken to be nil.

Age component amount

The HEAS uses age component amounts to limit the growth of the HEAS loan. The age component amounts are determined by the Minister by way of legislative instrument under SSAct subsection 1135A(3). A person's age is defined as their age on their last birthday. The legislative instrument sets out age component amounts for different ages, which are used in setting a loan limit for every $10,000 of available real assets.

Explanation: The age component amounts are intended to take into account the risk of debt exposure to the Commonwealth based on the person's current age. It is aimed at ensuring that there will be sufficient real assets secured to repay the loan at the time of recovery.

Example: A 70 year old single person offers a property valued at $180,000 as security for the loan and she has a nominated amount of $80,000. The maximum loan is calculated as follows:

  • $3,080 × (($180,000 − $80,000) ÷ $10,000) = $30,800

The following is the age component amount table outlined in the legislative instrument:

Age Age component amount ($)
55, and each earlier year 1,710.00
56 1,780.00
57 1,850.00
58 1,920.00
59 2,000.00
60 2,080.00
61 2,160.00
62 2,250.00
63 2,340.00
64 2,430.00
65 2,530.00
66 2,630.00
67 2,740.00
68 2,850.00
69 2,960.00
70 3,080.00
71 3,200.00
72 3,330.00
73 3,460.00
74 3,600.00
75 3,750.00
76 3,900.00
77 4,050.00
78 4,210.00
79 4,380.00
80 4,560.00
81 4,740.00
82 4,930.00
83 5,130.00
84 5,330.00
85 5,550.00
86 5,770.00
87 6,000.00
88 6,240.00
89 6,490.00
90, and each later year 6,750.00

Act reference: SSAct section 1135A(3) The Minister may, by legislative instrument …

Age component - members of a couple

In the case of members of a couple, the age component is based on the age of the YOUNGER partner on their last birthday. Although the age component is drawn from a single person, each partner's share of the value of real assets is used to work out the maximum loan available.

Example: A couple aged 72 and 68 years of age, offer property valued at $240,000 as security for a loan to each of them. The property is jointly owned by the couple, and they each have nominated amounts of $45,000. The younger partner's age is used to determine the age component, ($2,850 at age 68), and the maximum loan available for each partner is calculated as follows:

  • real assets equal $120,000 minus $45,000. After rounding, this comes to $70,000.
  • maximum loan for each member of a couple equals $2,850 multiplied by ($70,000 divided by $10,000) = $19,950.

Note: Where one member of a couple owns a greater than 50% share of the securing property, a 50-50 arrangement will operate where the maximum loan available for an individual applicant of a member of a couple is based on 50% share of the securing property. This arrangement also applies to members of a couple who are qualified for but not receiving income support payments.

Maximum loan available

The maximum loan available to a person is NOT a fixed amount that is set permanently. The maximum loan available is recalculated once every 12 months after the person's birthday (or, if applicable, the younger partner's birthday).

Explanation: Each year on a person's birthday, the age component amount available to them increases for each $10,000 of real assets they own. This is necessary on equity grounds, as the maximum loan available to different people of the same age and in the same financial position should be the same regardless of how old they were when they commenced participation in HEAS.

Act reference: SSAct section 1135A Effect of participation in PLS-maximum loan available

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