Do you have a HECS/HELP debt and want to buy a property? At Triple M Finance, we’ll evaluate how your HECS/HELP debt impacts your borrowing power and provide expert advice to help you enter the property market sooner.
HECS/HELP is a federal study assistance loan, with repayments determined by your salary level rather than the outstanding debt.
Most lenders treat HECS/HELP as an ongoing liability when assessing your borrowing power. While some use the actual declared repayment amount, others apply the compulsory ATO repayment rates. Either way, HECS/HELP repayments will reduce your borrowing power.
Should you consider paying off your HECS/HELP debt to minimise its impact on your borrowing power? The answer depends on your situation. For instance, if your annual income is $90,000, your HECS/HELP repayment, based on current thresholds, is $4,500 (5% of $90,000) per year. Even if your HECS/HELP balance is only $2,000, some lenders may still factor in the $4,500 as a liability, which can reduce your borrowing power by up to $50,000. In this case, paying off the remaining HECS/HELP balance could make sense.
Want to have your situation assessed? Reach out to us today!