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Myth Busted: You Can’t Access the PLS if You Have a Mortgage

18th May, 2020

Many seniors are under the impression that, because they have an existing mortgage on their home or property, they are not eligible for the Pension Loans Scheme (PLS). This is simply, not the case.

To be eligible for the PLS, you must have

  • Be an Australian resident
  • Be at least 66 years and 6 months of age
  • Own property in Australia which you have sufficient net equity in

By ‘net equity’, Centrelink/DVA means the value of your property minus all debts secured against that property.

Your eligibility for PLS payments is then determined by the ‘net equity’ you have in your property, as well as your age (or your partner’s age, if they are younger).

Based on these eligibility criteria, seniors with an outstanding mortgage (or any other debts) on their property are still eligible for the PLS.

To give you an example, William (72) and Betty (70) are a Full Age Pension Couple with a property worth $500,000 and no existing secured debts against the property.

Meanwhile, Jim (72) and Kathryn (70) are also a Full Age Pension Couple, with a home worth $600,000. They, on the other hand, have an existing mortgage outstanding on their home with a balance of $100,000. That is, they still owe $100,000 to the bank.

William & Betty
Jim & Kathryn
Property value
Existing mortgage
Net equity
PLS Eligible
PLS payment maximum
$711.80 / fortnight
$711.80 / fortnight
PLS payment duration
Ratio (LVR)
13 years
13 years
Net equity % after 20 years

This table highlights that even though Jim and Kathryn have an existing mortgage, their ‘net equity’ is the same as William and Betty’s. As a result, their PLS eligibility and entitlement are exactly the same.

The new PLS rules have been in operation since 1 July 2019, making the PLS increasingly more accessible to seniors throughout Australia. Many seniors, however, remain unsure of if or how they can benefit from the scheme. If this sounds like you, be sure to check out our free, quick and easy online PLS Calculator here.

We talk to hundreds of seniors each week, and we’ve found that many seniors with mortgages struggle to cover their bills and mortgage repayments on just the Age Pension alone. This is where the PLS can help you. In fact, approximately half of our successful PLS applicants had outstanding mortgages on their properties. By leveraging their substantial net equity, these pensioners are now able to access direct cash to cover their expenses in retirement.

We are also seeing this play out with our clients using our PLS Application service. Around half of the applications we’ve submitted had existing mortgages and were approved by Centrelink/DVA.

So, if you have an existing mortgage on your home and are needing some additional income to help you live a better life, try our PLS calculator. It will help you determine whether you’re eligible for the PLS and how you could access the cash you need for your retirement.

Try the PLS calculator

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