Links Property Finance · Home loans for first home buyers: HECS Debt and Home Loans

Lender policy on HECS is the part worth having someone check, because the spread between lenders on the same application can be material.

• Some lenders will disregard a HELP debt entirely where the remaining balance is small enough that it will clear within a short window, commonly around twelve months. If you are close to the end of your debt, that single policy difference can be worth more than any rate negotiation.
• Others apply the repayment as a fixed ongoing commitment for the full loan term, which is the most conservative reading and produces the lowest number. Between those two positions sit most lenders, and which one you approach changes your maximum.
• Policy in this area also shifts as the rules change. It is one of the clearer cases where comparing a panel beats guessing.

Usually not, and the reasoning is worth understanding rather than taking on trust.

• Paying down the balance does not reduce your compulsory repayment, because that repayment is calculated from your income. Unless the payment clears the debt entirely, or brings it low enough to fall inside a lender's disregard policy, you have spent deposit money without improving your borrowing power at all.
• And deposit money is doing more work where it is. A dollar of deposit reduces your loan, reduces your loan-to-value ratio, and may reduce or remove lenders mortgage insurance. A dollar off a HELP balance usually does none of those things.
• The exception is a small remaining balance. Clearing $3,000 to remove a repayment for good can be worth it. Paying $20,000 off a $50,000 debt generally is not.

Repayment thresholds and rates are set by the Australian Government and change most years, and the system was restructured in recent years to use marginal rates rather than a single percentage of total income.

Any figure you find online is only as current as the page it sits on.

Rather than reproduce numbers that date, we check your actual position against the current rules at the time you apply. The authoritative sources are the Australian Taxation Office and Study Assist.

Work out what your compulsory repayment is at your income, and what it costs you in borrowing capacity in real terms rather than as a vague worry.

Then match you to lenders whose HELP policy suits your position. If your balance is close to clearing, that means finding the lenders who will disregard it. If it is substantial, it means avoiding the ones that treat it most harshly.