Does HECS-HELP debt affect your home loan application?

Written By Jacqueline Newman

Whenever you apply to borrow money, like a home loan, a prospective lender will evaluate your liabilities to see how much they can safely loan you.

Liabilities are any financial obligation you may have, such as regular payments and debts. This includes expenses such as:

  • Personal Loans

  • Car Loans

  • Credit Card debt

  • Dependent children

  • Higher education (student) debt

  • Tax debt.

The lender then will determine your serviceability by comparing your income against these debts. If they drain too much of your income, the lender will limit your borrowing capacity and restrict the size of your home loan.

In Australia, this means that your HECS-HELP debt will be taken into account whilst considering your home loan application.

Given that HECS repayments are tiered and based on income, this is most likely to affect young of low-income home buyers the most. Without surplus cash to offset your risk, banks aren’t likely to lend you as much as you want.

It’s something to be keep an eye out for when it’s time to apply for your home loan.

Jacqueline Newman
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