Minister Ruston Interview – Home Equity Access Scheme
E&OE…
GARETH PARKER:
The Federal Government are going to revamp a scheme. I’ll call it a reverse mortgage scheme. But I’ll introduce the Minister for Families and Social Services Anne Ruston. Anne, good morning.
MINISTER RUSTON:
Good morning Gareth.
GARETH PARKER:
I mean, is that what this is? Is it a Government-backed reverse mortgage scheme?
MINISTER RUSTON:
That’s a pretty good description of it. It’s a modest and it’s a targeted type of reverse mortgage which is based on the Age Pension. But what we want to do is make sure that anybody who is over the Age Pension age knows that they’re able to access this scheme to do exactly what you said. And that is to be able to realise some of the value that could be in your real estate and it could just be in the home that you’re living in so that people can improve their retirement- the quality of their retirement.
GARETH PARKER:
Okay. So you’ve got to be over Age Pension age. What are the qualifiers there?
MINISTER RUSTON:
That’s it. So all we’re saying is, anybody who is technically eligible for the Age Pension – so that means they need to be 67 and an Australian resident – that’s pretty much all they need to do. So self-funded retirees can also get access to this scheme, which is something that we really want to emphasise. Because I think, a lot of people have always thought it was only for people who were on the Age Pension – that is not the case. You can be on the Age Pension, part pension, but you can also be a self-funded retiree.
GARETH PARKER:
Okay. So anyone who’s over that pension age is eligible. How will the scheme work Minister?
MINISTER RUSTON:
Okay. So through the Government-guaranteed scheme, which is now called Home Equity Access Scheme people can apply to get up to 150 per cent of the equivalent of the Age Pension. They can do it either by getting a fortnightly payment or they can get up to 50 per cent of the Age Pension in two lump sum payments throughout the year – that might be because they want to do some renovations on their house; they might want to go on a holiday – entirely up to them. So what we’re saying is it’s quite a modest scheme but people of Age Pension age will be able to get access to up to 150 per cent of the equivalent of the Age Pension rate that they can use to supplement their incomes.
GARETH PARKER:
So if they are a pensioner, is that amount of money on top of their pension?
MINISTER RUSTON:
No this total amount is 150 per cent. So if you’re on the pension you can get an additional 50 per cent.
GARETH PARKER:
Okay.
MINISTER RUSTON:
But if you’re a self-funded retiree you can get 150 per cent and obviously part pension will get some combination of the two.
GARETH PARKER:
Right. So in return for unlocking that either lump sum or additional payment, what rights are you giving the Government over your home?
MINISTER RUSTON:
It is a reverse mortgage. So it will be a debt that gets incurred against the property. But a couple of things that are worth pointing out here – one is that in July we moved to put in a No Negative Equity Guarantee. So to any people who are listening to this and who might like to consider this, there is no circumstance by which the debt that can be accumulated against this particular product can ever exceed the value of your property. So if you know, unfortunately we saw a reduction in the value of property, you can never actually have a debt greater than the value of your property. So the No Negative Equity Guarantee is something the Government has put in place so people can have confidence that there’s never a situation where they’ll owe more. But as I said we tried to build this product so it is more appealing for older Australians because we want them to be able to get access to the equity that they have to improve their retirement.
GARETH PARKER:
Yeah. And so that debt that accrues against the value of the home, when is that settled? Is it settled at the point where the house is sold?
MINISTER RUSTON:
It could come out of an estate or it could be when the property’s sold. That would be up to the individual’s circumstances. And people can pay back the debt at any time if a circumstance changed and they wanted to do so. So it would be like any other mortgage product. The individual remains totally in control of how they wish to extinguish the debt.
GARETH PARKER:
I think there is still a lot of nervousness in the community about reverse mortgages. People fear they’ll lose their homes. How many people do you think might seek to access this scheme? And would you urge people who are living their older years on low incomes to have a close look at it?
MINISTER RUSTON:
I would encourage everybody to have a look at it. It’s not going to be for everybody but I certainly think it’s an option for older Australians to look at. It’s totally voluntary. But it was interesting today, the Australian Seniors have come out and held that this is a really good improvement and they’re very keen for their members to consider having a look at this. Because as you rightly point out, people who bought their house a long time ago, their value has increased significantly. In your older years, it would be great to be able to realise the value that you have in your home. But we also want people to be able to stay in their home, as well as being able to get access to the equity so that they can have a great life but keep that roof over their head that they’ve had over their head for 10, 15, 20, 30 years.
GARETH PARKER:
Minister thanks for explaining it to us. I appreciate it.
MINISTER RUSTON:
Thank you so much for your interest.