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How Much Is Your HECS Debt Really Costing Your Borrowing Power

Writer: Tom Wiltshire
Tom Wiltshire
Sep 9
2 min read

Most vets know HECS debt affects their borrowing power. Very few know by how much, or why the number moves so much depending on which lender is doing the sums.

Why HECS Reduces Borrowing Capacity

Lenders treat your compulsory HECS repayment as an ongoing financial commitment, the same way they treat a car loan or a credit card limit. It gets factored into your serviceability, the calculation that determines how much you can borrow.

A relatively small annual repayment can reduce your borrowing capacity by a figure many times larger than the repayment itself, a mathematical consequence of how loan serviceability works over a 25 to 30 year term.


Some Lenders Now Ignore It Entirely

This is changing, and not evenly. Some lenders will now disregard your HECS debt altogether in certain circumstances, either if you are expected to pay it off within a set timeframe, or if your remaining balance falls under a certain threshold.


Why the Lender You Use Changes the Number

Beyond that, not every lender calculates the ongoing repayment the same way either. Some read the figure directly from your payslip. Others calculate it independently from your income against the ATO's repayment thresholds, which often produces a larger figure than what appears on your payslip.

For vets earning a mix of salary and locum income, this difference matters even more, because how total income is calculated for the HECS assessment can vary between lenders as well.

The exact figure varies by lender and by your individual numbers. The pattern holds consistently, the lender you use can materially change your outcome, whether your HECS is fully counted, partially counted, or disregarded altogether.


Try the Numbers Yourself

We built a tool that lets you see this in real terms. Enter your income and your HECS status, and it shows you an indicative borrowing power reduction based on real lender calculations. It takes less than a minute and gives you a genuine sense of where you stand before you have a conversation with anyone.


Our Take

HECS debt is not something to be worried about when it comes to buying a home. It is something to understand properly, because the difference between a lender who assesses it favourably and one who does not can be significant. That is exactly the kind of detail we sort out before you apply anywhere.


 
 
 

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