Pension Loans Scheme Australia : Department of Human Services

Organization : Department of Human Services
Service Name : Pension Loans Scheme
Country: Australia

Website : http://www.humanservices.gov.au/customer/services/centrelink/pension-loans-scheme

Pension Loans Scheme:

A scheme to help you use the capital you have tied up in real estate to provide income up to the maximum qualifying payment.

Related : Department of Human Services Assistance for Isolated Children Scheme Australia : www.statusin.org/25912.html

The Pension Loans Scheme is a voluntary arrangement that provides support in the form of a loan for either a short time or an indefinite period.

It is paid in fortnightly non-taxable instalments. You can nominate to receive an amount up to the maximum Age Pension rate.

Eligibility for Pension Loans Scheme
You may be eligible for a loan under the scheme if:
** you or your partner is of age pension age
** you have equity in real estate in Australia to use as security for the loan
** you or your partner receive a reduced, or nil, rate of a qualifying payment for the scheme due to the application of either the income or the assets test, but not both, and
** you meet Age Pension residence requirements

The following qualifying payments allow access to a top up payment under the scheme:
** Age Pension
** Disability Support Pension
** Wife Pension
** Carer Payment
** Widow B Pension
** Bereavement Allowance

The scheme is not available if you receive the maximum rate of any of these qualifying payments. However, you can access capital tied up in your real estate assets to provide extra income if you are of age pension age but, because of assets or income but not both, are ineligible for a qualifying payment or only eligible for a reduced payment rate.

Making a claim under the scheme does not stop you from making a claim under the assets hardship provisions. However, you will only be paid under 1 of these provisions.

Pension Loans Scheme costs and interest rate:
All costs associated with establishing, changing and finalising the loan, such as legal and solicitor costs, are your responsibility. We will send you a letter when the loan has been established, to tell you the amount we will recover from you. You can choose to pay these costs immediately or we can add the costs to the outstanding loan balance.

Interest charged on the outstanding loan balance is a compounding rate, currently 5.25%. The interest rate is applied to the outstanding loan balance each fortnight. Interest continues to accrue until the loan is repaid and increases the amount to be repaid.

The outstanding loan balance consists of the principal loan amount, plus accrued interest, plus any outstanding costs, less any repayments made.Your scheme payment is reviewed regularly.

Repay the loan :
** You can repay the loan in part or full at any time.
** If you want to sell the property used as security for the loan, you need to contact us first.

** You can either transfer the loan to another property including your new home or you can repay the loan on the date of settlement.
** If there is an outstanding loan after your death, your estate or in some cases your surviving partner’s estate can make repayments.

How much you get :
** The amount you get each fortnight can be up to the maximum rate of income support payment you qualify for.

The total loan you can get depends on the :
** equity you have in the property you offer as security
** equity you want to keep in your property, and
** age of you or your partner, whoever is younger
** Loan payments are not taxable.

Security of the loan :
** You must use real estate in Australia as security for your loan.
** It can be the home you live in or an investment property.

** You may also use real estate owned by a private company or trust as security for the loan, if you’re a controller of that company or trust.
** If you have more than one property, you can choose which to use as security for the loan.

** We’ll register a charge with the Land Titles Office on the title deed of the property you’re using as security. You’ll have to pay any costs associated with registering and removing this charge.

** A licensed valuer will value the property. There will be no cost to you.
** Don’t forget that the loan payment reduces your equity in the real estate used as loan security.