Advance payment examples

Examples of Home Equity Access Scheme advance payment calculations.

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Read examples of how a lump sum advance payment can impact your maximum fortnightly loan rate.

Example 1

George gets the maximum $987.60 single rate of Age Pension each fortnight. George also gets the maximum $493.80 rate of loan payments through the Home Equity Access Scheme each fortnight. This means George gets a combined fortnightly payment equal to 150% of the maximum pension rate of $1,481.40 each fortnight. That is the fortnightly pension rate multiplied by 1.5 - $987.60 x 1.5.

Based on the maximum rate of Age Pension of $25,677.60 per year, George can get an advance payment of up to $12,838.80. That’s 50% of the maximum pension rate. George can choose to get this full amount in one payment, or get a smaller amount.

George applies to get a single lump sum advance payment of $10,000. We add the amount to George’s loan balance which accrues compound interest each fortnight.

The advance payment amount reduces George’s fortnightly loan payment by $384.62 per fortnight for the next 26 fortnights. This is the $10,000 advance payment amount divided by 26. The reduction applies for a period of 26 fortnights. This means:

  • the fortnightly loan payment reduces from $493.80 to $109.18 for 26 fortnights.
  • the combined fortnightly payment is $1096.78, the $987.60 pension amount plus the $109.18 reduced loan amount.

George used the equity in his principal home as security against the loan. This means the advance loan payment is an assessable asset for pension purposes. We record the advance payment amount on George’s record for assessment under the income and assets tests. The advance amount is exempt under the asset test for the first 90 days. After 90 days, the assets test will apply and this may affect George’s pension amount. George can view the details in his online account and make updates at any time.

Example 2

Olli has a partner and does not currently get a pension or participate in the Home Equity Access Scheme. Olli submits a Home Equity Access Scheme application online to get the maximum advance loan payment available, which is $9,677.20. That’s 50% of the partnered maximum pension rate.

We assess Olli as meeting the eligibility criteria and we grant the claim. We pay the advance payment in a lump sum and the loan balance for Olli to repay is set to $9,677.60. Interest begins accruing on the loan balance and compounds every 14 days.

As Olli got the maximum advance amount in one payment, Olli cannot get another advance payment for 26 fortnights. They can however request at any time to get regular loan payments each fortnight.

If Olli chooses to get fortnightly payments, the maximum amount Olli can get is reduced for the advance period. To work this out, we divide the $9,677.20 advance amount by 26. This means Olli’s fortnightly loan payment will reduce by $372.20 per fortnight. This means Olli can get a regular loan payment of $744.40 each fortnight.

That’s the maximum $744.40 pension rate multiplied by 1.5 minus the advance payment reduction of $372.20 each fortnight. ($744.40 x 1.5 = $1116.60 - $372.20).

Page last updated: 1 July 2022.
QC 62809