If you have a HECS-HELP debt it might affect your home loan borrowing power.
Let's first understand what a HECS-HELP debt is. More commonly used as HECS (Higher Education Contribution Scheme), it is a part of Government scheme to help Australian students through uni. typically covering tuition fees, lecture fees as well as student services and amenities fees.
Once you reach a certain income threshold, HECS debt repayment rate will automatically be put in place and part of your salary will start being deducted. Even if you move overseas. This repayment threshold changes yearly so you can refer to the Australian Tax Office (ATO) website for current rate.
So how does HECS debt affects home loan application?
Most lenders treat HECS debt the same as regular debt. That does not mean you cannot get a home loan. It’s just that the lender will use your HECS debt when figuring out how much you can borrow. It will be shown as a liability.
We would suggest finding out your outstanding HECS debt. As when we are sourcing for lenders, we can find the one that will be suitable for your financial situation. Knowing how much you owe makes the process much easier.
You can find how much you owe on mygov website, calling ATO or on the HECS portal.
If you are unsure of how HECS or other debt will affect your borrowing power, get in touch with us and we will assist you.