Every way of releasing equity from your home has a cost, and most have a lasting consequence. Across the four main routes — a reverse mortgage, home reversion, the government Home Equity Access Scheme, and fractional funding (selling fractional interests in your property) — the risks fall into a few groups. You either take on debt that grows over time, or you give up a share of your home’s value; some routes are hard or impossible to reverse; each comes with terms that limit what you can do with your home; and any of them can change your Age Pension, your tax position, and what your home leaves to your estate.

None of this makes equity release wrong for you. It makes it a decision to weigh carefully, route by route, with the real terms in front of you and licensed advice where the stakes are high.

What are the main risks of home equity release?

The routes split into two families, and the family sets the core risk. Debt routes — a reverse mortgage and the Home Equity Access Scheme — charge interest that compounds, so the amount owed grows the longer the loan runs, eating into the equity you keep. Sale routes — home reversion and fractional funding — charge no interest, but you give up a share of your home’s value or its future growth, and that trade can be hard or impossible to unwind.

Route	Debt or sale	Core risk to you
Reverse mortgage	Debt	Compounding interest erodes equity
Home Equity Access Scheme	Debt (government)	Compounding debt; pension-linked limits
Home reversion	Sale of a share	Discounted, hard-to-reverse sale
Fractional funding	Sale of interests	Lost future growth; ongoing terms

Two risks sit across all four. Each reduces what your home eventually contributes to your estate — either a debt to repay or a share already sold. And each can change how Centrelink and the Australian Taxation Office treat you, because converting the value locked in your home into cash, or into another kind of asset, can shift how your pension and tax are assessed. Those cross-cutting risks are covered near the end of this article.

The sections below take each route in turn. Product terms, fees and rates are stated as at July 2026; providers’ terms vary, and the specific numbers in your own contract are what count.

How does a reverse mortgage put your equity at risk?

A reverse mortgage is a loan secured against your home. You usually make no repayments while you live there — the interest is added to the balance instead, and the whole amount falls due when you sell, move into aged care, or die.

The central risk is compounding. Because nothing is repaid along the way, interest is charged on the growing balance, so the debt can rise steadily and, over a long enough period, consume a large part of the equity you were trying to protect. The longer the loan runs, the more of your home’s value it can absorb — regardless of what the property market does.

There is a statutory backstop, and it is a real one. Reverse mortgages taken out from 18 September 2012 carry negative equity protection under the National Consumer Credit Protection Act 2009: you can’t end up owing the lender more than your home is worth (Moneysmart). That caps the downside — but it protects you from owing more than the home’s value, not from the debt eroding most of the equity within it. Contracts signed before that date may not include the protection at all.

A reverse mortgage is a credit product regulated by ASIC. That brings responsible-lending obligations and pre-signing equity projections, which are protections a sale-based option does not carry. Our guide to how home reversion differs from a reverse mortgage sets the two side by side.

What are the risks of home reversion?

Home reversion is the sale, today, of a share of your home’s future sale proceeds. There is no interest and nothing to repay — the provider is paid its share when the home is eventually sold. The risks are different in kind from a loan, but they are not smaller.

The first is the discount. Because the provider may wait years, even decades, to be paid, it pays you well below the current value of the share it buys. In Moneysmart’s worked example, a provider buying a 20% share of the future value of a $500,000 home might offer between $37,000 and $78,000 today, depending on the owner’s age — a fraction of a straight 20% of today’s price. ASIC research from 2005 found providers paying 35–60% of the market value of the share sold; that figure is dated and is not current data, but it shows the scale of the discount involved.

The second is that the sale is hard to reverse. You have sold a share of your home’s future value; buying it back, if the provider allows it at all, means paying for the value it has since gained. If the home rises strongly in value, the share you sold grows with it, and the cost of that share is borne out of your eventual sale proceeds.

The third is thinner protection and a small market. Home reversion is not a loan, so it sits outside the consumer credit framework — the negative equity protection that applies to reverse mortgages does not apply here (Moneysmart, ASIC’s free consumer website). ASIC still oversees provider conduct, but the specific statutory backstop is absent. The Australian provider market is also small: as at July 2026, at least one provider operates, offering home reversion agreements in metropolitan Melbourne and Sydney, which limits choice and comparison.

What are the risks of the Home Equity Access Scheme (HEAS)?

The Home Equity Access Scheme is the Commonwealth’s own equity release option, run by Services Australia. It is a loan, and it carries a loan’s central risk: the debt compounds. As at July 2026, HEAS charges interest of 3.95% per year, compounding fortnightly (Services Australia). You make no repayments while the loan runs, so the balance grows against the value of the home you have offered as security. The rate is set by the responsible minister and can change.

Two features shape the risk. The scheme is pension-linked: each fortnight, your combined pension and loan payments are capped at 150% of the maximum pension rate, which limits how much you can draw. And the maximum loan amount comes from an age-based formula applied to the value of the property you offer as security — Services Australia publishes the full workings. A younger borrower can draw less against the same home, precisely because the loan has longer to compound.

Because HEAS payments and your pension are assessed together, and because the loan is secured on your home, its interaction with your entitlements and your estate needs care. Those cross-cutting effects are covered below.

What are the risks of fractional funding?

Fractional funding sells fractional interests in your property to investors, and you receive the proceeds as funding. This is the model MyBrix — the platform behind this blog — operates; the terms below are as at July 2026, from the MyBrix Product Disclosure Statement. A Brix is a fractional economic interest in a property — a defined share of its economic value, not a share of your title.

Start with what you keep, because it is genuinely different from the other routes. You remain the registered legal owner and can keep living in the home; selling Brix does not affect your occupancy rights. That is a real advantage over selling outright. But it does not make the arrangement risk-free, and the risks below deserve the same weight as the benefit.

You give up future growth on the Brix you sell. Once Brix are sold, you permanently relinquish the economic benefits attached to them — including a proportional share of any growth in the property’s value — unless you buy them back. If your home rises in value, that gain accrues to the Brix holders in proportion to their holdings, not to you, and your eventual sale proceeds are reduced accordingly.

You must keep a minimum stake. Once funding completes, you have to retain a minimum Brix holding — generally 20% (2,000 of the 10,000 Brix a property is divided into), though a lower holding such as 10% may be approved case by case. That caps how much of your home’s value you can raise this way.

There can be an ongoing occupation fee. Where it is agreed as part of your arrangement, an occupation fee of 0.2% to 0.5% per month of the funded amount applies for as long as you occupy the home. That is a recurring cost, paid by you to the other Brix holders, that a straight sale would not carry.

Buying back gets more expensive over time. You can buy back Brix, but not at the price you sold them for: the buyback price is predetermined and agreed before your property lists, anchored to the amount investors originally paid, and it rises each year by a fixed annual increase you set within a disclosed band of 10% to 30% per year. That increase is not interest, but its effect is that the price is always higher than what the Brix sold for, and the longer you wait the more it costs to reverse the arrangement — so check the exact rate and the minimum monthly buyback commitment in your agreement before you list. Our guide to buying back the share of your home you sold walks through the mechanics.

Some decisions about your home are no longer yours alone. Renting out or subletting the property requires MyBrix’s approval or facilitation; letting it without that triggers an unauthorised rental fee of market rent plus 50%, backdated to the start of the arrangement. Converting an owner-occupied home to a rental carries a fee of 1.0% of the property’s current market value and involves liaising with the Brix holders. On renovations, the Product Disclosure Statement does not state whether you need consent — any such rules would sit in your participation agreement, which is not a public document, so confirm what you can and can’t do before you commit.

A first-ranking mortgage sits over your home. Even though you stay on title, a first-ranking mortgage is intended to be registered at settlement, held on trust for all Brix holders. It ranks ahead of other security over the property, and it shapes what happens when you sell or reach the end of the arrangement.

Costs can apply before and after the funding. Fees are generally non-refundable and may be payable even if the funding does not proceed. At the end of the arrangement, further charges can apply — for example, a balloon payment fee of 10% to 30% at the end of a short-term facility, a holdover fee if you stay beyond the 10-year maximum term, and a 5.0% selling management fee on any sale — and selling the property without MyBrix’s approval or facilitation carries an unauthorised sale fee of 10% of the Brix you hold. These belong in your assessment of the total cost, not just the headline funding figure.

How does equity release affect your pension, tax and estate?

These effects apply to every route, and they are easy to overlook because they land later — on your Centrelink assessment, your tax return, or your estate — rather than on the day the money arrives.

Age Pension. Converting value held in your home into money or another asset can change how your entitlements are assessed, because your home is treated differently from the cash or investments you might hold instead. Services Australia’s published guidance addresses selling your whole home and holding real estate as an asset; it does not specifically cover selling a fractional economic interest while you keep living in the home, so the outcome for a part-sale-and-stay is not settled in that guidance and depends on your circumstances. Payments can be affected in ways specific to your situation — contact Services Australia’s free Financial Information Service before proceeding.

Tax. How proceeds are taxed differs between borrowing against your home, selling a share of it, and selling it outright. For a fractional sale specifically, the Australian Taxation Office publishes no guidance on the capital gains tax treatment of selling a fractional economic interest while you retain title and keep living in the home — it is not resolved whether that sits inside your main residence exemption or is treated as a separate asset, so neither a tax-free nor a taxable outcome should be assumed. Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.

Your estate. Every route reduces what your home eventually contributes to your estate — a debt to be repaid, or a share already sold. What happens to a loan or a funding arrangement when you die, and how it interacts with your will, varies by product and is not always spelt out in the product documents. Speak with an estate planning lawyer about how this interacts with your will and estate.

What should you check before releasing equity?

There is no single safest route — the risks trade off against each other, and which ones matter most depends on your situation. These are the factors to weigh rather than a recommendation to pick one.

• Time. A debt product’s cost grows the longer it runs; a sale-based option’s cost tracks the property’s value. Neither is automatically cheaper — the horizon decides.
• Reversibility. Ask whether the arrangement can be unwound, and at what cost. A reverse mortgage can be repaid; a sold share of future value usually costs more to buy back the longer it runs.
• What you keep. Ask each provider precisely which rights you retain — to live in the home, to renovate, to rent it out, to sell — and get the answers in writing before you commit.
• The total cost. Add up upfront fees, any ongoing fees, and exit or end-of-term charges, not just the headline amount you receive.
• The knock-on effects. Factor in the pension, tax and estate consequences above, which land well after the money arrives.

Weighing a reverse mortgage against a share sale is a genuine trade-off; our reverse mortgage versus selling a share of your home comparison sets out the maths on both sides. If the Age Pension is part of your picture, our guide to how selling a share of your home affects your Age Pension covers the assessment framework in more detail.

Where can you get reliable information?

Moneysmart, ASIC’s free consumer website, covers reverse mortgages and home reversion; Services Australia publishes the HEAS terms and eligibility; and each provider’s disclosure documents carry the product specifics — for MyBrix, the Product Disclosure Statement and Target Market Determination at mybrix.com.au. Our pillar guide to accessing home equity without a loan sets out the options side by side.

General information like this can map the risks; it cannot weigh them for your circumstances. A licensed financial adviser can — and for a decision that touches your home, your income and your estate, that advice is worth getting before you sign anything.