Will my HECS debt affect my chances of gaining finance?

July 30, 2017
Ian Robinson

While prospective friends or partners probably won’t ask for details of your liabilities before committing to a long term relationship, mortgage lenders will.  Many university leavers carry with them large amounts of debt accumulated as part of the Higher Education Contribution Scheme (HECS), and when they start thinking about buying a property they worry that such a debt may affect their chances of finance approval.  

If your wondering how your HECS debt will impact your approval contact me today on 0414 521 012 or email ian.robinson@mortgagechoice.com.au to learn more.

Eligible students can defer payment of their contributions through the Higher Education Loan Program (HELP). These loans are referred to as HECS-HELP for Commonwealth-supported students and FEE-HELP for full-fee paying students.  

Lenders will always ask potential borrowers to disclose all details of their assets, such as investments, savings accounts, vehicles, jewellery, property etc, in addition to any liabilities they have, including any dependencies, poor credit ratings and/or existing loans, including HELP debt.  

If a student decides to defer all or part of their fees they are not required to start making payments on their HELP debt until their annual taxable income reaches $51,309. Once they reach this threshold their employer must withhold four percent of their taxable income, rising to a maximum eight percent once their income reaches $77,248, and direct it towards repaying the HELP debt.

This alone reduces the potential borrower’s income and may put them at risk of loan default or inability to service the loan.  

Keep in mind different lenders will calculate loan serviceability in different ways and this may depend on the chosen loan product. A reputable loan consultant such as Mortgage Choice can assist HELP indebted borrowers find a loan to suit their individual situation and lifestyle. 

For more information contact Ian Robinson on 0414 521 012 or email ian.robinson@mortgagechoice.com.au

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