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3 common myths about the Pension Loans Scheme busted

7th December, 2021

The government's Pension Loans Scheme (PLS) has been in operation in various forms since 1985, however until 2019 the eligibility rules made it restrictive for most Australian seniors to qualify.

The changes, introduced from 1 July 2019, mean that all Australian residents who own property and are of pension age could be eligible for the scheme. The PLS provides a regular payment of up to 150% of the full age pension (less whatever age pension you receive) each fortnight with a lump sum option being introduced from July 2022.

Since 2019, Pension Boost has been working with seniors to educate them on how the scheme could benefit them while handling the application process for those who decide to take up the PLS. To date, we've helped our clients access more than $90 million in PLS funding to help them unlock a better life.

Find out if you're eligible

Unfortunately, too little has been invested by the government to make sure that everyone eligible for the PLS is aware of the scheme or how it works. This leaves a lot of room for misinformation and myths to be spread among the community, which is why we've decided to bust a few of those myths for you.

Myth #1: I'm not on the Age Pension so I'm not eligible for the PLS

Under the revised PLS rules introduced on 1 July 2019, seniors do not have to be receiving or eligible for the Age Pension to be eligible for the PLS. Self-funded retirees are eligible, provided they (or their partner if in a couple):

  • meet the minimum age (currently 66 years and 6 months) and residency requirements
  • own the underlying land – not lease or rent it (which is how many retirement village and over 50 community living centres are structured)
  • have sufficient 'net equity' (i.e. the property value less all secured debts) in the property being put up as security.

Pension Boost is seeing an increasing demand for PLS from self funded retirees.

Myth #2: I can't access the PLS because I have an existing mortgage

Many seniors are under the impression that because they have an existing mortgage on their home or property, they're not eligible for the PLS.

This is definitely not the case with around 4 in 10 of Pension Boost's clients having an existing mortgage

Provided the above listed requirements are met, even with a mortgage on your property you're eligible. The biggest consideration for seniors with mortgages is the net equity available in their property.

By 'net equity', Centrelink/DVA means the value of your property minus all debts secured against that property, i.e. your mortgage.

To learn more about this and see an example, read our article on the PLS and existing mortgages.

Myth #3: The PLS is only for those with homes in affluent areas in Australia

There seems to be a myth out there amongst seniors, perhaps set by the banks and commercial providers' marketing efforts, that reverse mortgages are exclusively for people with homes in the wealthiest suburbs like Vaucluse in Sydney or Toorak in Melbourne.

Whilst commercial providers are generally restricted in the areas and property types they’ll accept for their reverse mortgage loans, that’s not true of the Pension Loans Scheme and our experience of assisting seniors in accessing the PLS backs this up.

Any real estate property, regardless of the location within Australia is eligible, provided you own it.

So, are you eligible for the PLS?

To help you find out, try our PLS Calculator today.