Equity Release in Australia 2025: How to Unlock Home Value

With Australian property values soaring and many homeowners sitting on significant untapped wealth, equity release is surging in popularity—especially among retirees seeking to supplement their income or help family members break into the housing market. But how does equity release work in 2025, what’s changed in the regulatory landscape, and is it the right choice for you?

What Is Equity Release and Who Is It For?

Equity release lets homeowners unlock the value tied up in their property without selling or downsizing. The most common products are reverse mortgages and the government-backed Home Equity Access Scheme (HEAS), tailored for Australians aged 60 and over. With these options, you can receive a lump sum or regular payments, using your property as security while continuing to live in your home.

• Reverse mortgages: Borrow against your home’s value, repayable when you sell, move into aged care, or pass away.

• HEAS: A government loan paid as fortnightly income, now with increased payment caps in 2025, allowing up to 150% of the full Age Pension rate.

• Shared equity schemes: Some states offer programs where the government or a partner co-invests, helping you access home equity for renovations or aged care costs.

Equity release suits retirees wanting to boost their lifestyle, pay for medical needs, or support children with property deposits. Younger homeowners may also access equity—via refinancing or line-of-credit loans—for renovations or investments, but these are distinct from the retirement-focused products above.

2025 Policy Updates and Market Trends

In 2025, several important policy changes and market shifts are shaping the equity release landscape:

• HEAS expansion: The Federal Government increased the maximum loan amount, making the scheme more attractive for pensioners with limited super savings.

• Interest rate recalibration: With the RBA holding rates steady but lenders maintaining a risk premium, reverse mortgage rates in 2025 are averaging 7.1–7.5% p.a.—higher than standard home loans, but lower than unsecured credit.

• Consumer safeguards: New ASIC regulations require lenders to provide clearer projections of long-term costs, including impacts on estate value and aged care eligibility.

• State-based pilots: Victoria and New South Wales are trialling expanded shared equity programs for older Australians, giving more flexibility beyond traditional reverse mortgages.

These updates aim to protect consumers while responding to Australia’s ageing population and persistent wealth tied up in real estate. According to the ABS, over 60% of retirees now own their homes outright—representing a collective property wealth of more than $1.6 trillion nationwide.

Pros, Cons, and Real-World Examples

Equity release can be a powerful financial tool, but it’s not without risks. Here’s a balanced look at the pros and cons, plus some real-world scenarios:

Pros:

  - Stay in your home while accessing needed funds.

  - No regular repayments—reverse mortgages are repaid when the property is sold.

  - Flexible payment options: lump sum, regular income, or a combination.

  - HEAS offers government-backed security and capped interest rates (currently 3.95% p.a. in 2025).

Cons:

  - Compound interest can erode home equity, reducing what you leave to heirs.

  - Eligibility restrictions: most products are for homeowners aged 60+.

  - Potential impacts on Age Pension eligibility if lump sums are not spent appropriately.

  - Exit fees and ongoing costs can add up.

Example 1: Margaret, 72, uses a reverse mortgage to fund $80,000 of home modifications and medical expenses. Over 10 years, her loan grows to $116,000, but she continues living at home and retains enough equity for her estate.

Example 2: Ken and Helen, both on the Age Pension, opt for the HEAS, drawing an extra $750 per fortnight in 2025. This supplements their income without affecting their pension entitlements, and the government’s no negative equity guarantee ensures their debt will never exceed the home’s value.

Is Equity Release Right for You?

Equity release isn’t a one-size-fits-all solution. It’s best suited to older Australians with substantial home equity and a desire to age in place, especially if other income sources are limited. Consider your goals—whether it’s home upgrades, health care, or helping family—and weigh the long-term impact on your estate.

Before proceeding, compare offers, examine all fees, and use ASIC’s MoneySmart calculators to model different scenarios. New regulatory requirements mean lenders must provide detailed projections, so take advantage of this transparency to make an informed decision.