Will HECS Affect Your Home Loan Process?

Monday, January 17, 2022

Attention First Home Buyers… 

Your HECS-HELP debt will impact the loan amount you will qualify for. But don’t stress, our brokers are here to help you calculate how big that impact will be, and help you work out if it’s worth paying out the debt prior to applying for a home loan

The High Education Contribution Scheme (HECS) or Higher Education Loan Program (HELP) has allowed hundreds of thousands of Australians to complete tertiary education even though they may not have been able to afford the tuition fees at the time.

It’s a great system we are thankful for.

For those of us who are still paying off our HELP debts, it’s important we understand how it can impact our first home loan. A HECS-HELP loan doesn’t accrue interest, but the balance does increase each year on June 1st based on an increase in a cost-of-living index the ATO publishes. 

When you apply for a home loan, our broker will review your income, deduct your living expenses and liabilities, and make a calculation about how much you can afford to loan off your net income.  

If you are earning over the minimum HECS-HELP Repayment Threshold, which can be found here, a portion of your income must be paid towards your HELP debt either when you lodge your tax return, or periodically when you get paid from your employer. This repayment is included in your financial commitments when assessing your borrowing capacity. The higher your income, the higher the repayment rate, which will mean a bigger impact to your borrowing capacity. 

Let’s assume you’ve saved up a deposit and are ready to look at buying your first home. 

What are your options when you have a HECS-HELP debt: 

  • Don’t payout your HECS-HELP debt prior to applying for a loan

We can assess your borrowing capacity and include your HECS-HELP debt as an ongoing liability. It may reduce your borrowing  capacity, but based on your overall situation it may not have a big impact, and you can use your cash to put towards a deposit for your first home.

  • Payout your HELP debt prior to applying for a loan 

If we calculate that by paying out your HECS-HELP debt that your borrowing capacity is greatly improved, we can look at the pros and            cons of that strategy. By using your savings toward the debt instead of the property, does it impact your ability to pay a deposit, or does          it mean the loan you require will increase to above a 80% loan to value ratio? Our broker team can answer those questions, so you have          all the information to make an informed decision. 


Want to find out your current HECS debt? 

There are a few ways to find out how much you owe: 

 Looking to move forward? Talk with our team of award winning expert home loan brokers today by:
Calling or
Emailing or
Looking through our list of brokers

Don’t hesitate to get in touch with one of our team. Our head office is based in Balwyn, east of Melbourne, but we have brokers able to assist clients in all suburbs and towns in Victoria, New South Wales and the rest of Australia. 


 We’ve listed all links that we thought might be helpful for you here – Please note these links are all from official government websites.,-TSL-and-SFSS-repayment-thresholds-and-rates/,they%20are%2011%20months%20old.