Same Income, Better Outcome: How Smart HECS Strategies Helped Adam Borrow More

If you're on a good income but still feeling locked out of the property market, your student debt might be the silent deal-breaker. HECS-HELP debt has always been a part of the home loan equation, but recent changes to how lenders assess it mean it's becoming an even bigger factor in determining how much you can borrow. Whether you’re speaking with a Gold Coast Mortgage Broker, a Sunshine Coast Mortgage Broker, or your local Brisbane Mortgage Broker, chances are they’ve seen firsthand how even a modest HECS balance can quietly chip away at your borrowing power.

But here’s the good news: with the right advice from a savvy Mortgage Broker for Sole Traders, even a minor tweak to your HECS debt can dramatically improve your borrowing capacity, without blowing your savings or putting your plans on hold. That’s precisely what happened when we worked with Adam, a client who came to us ready to buy but wasn’t quite sure how to close the deal.

Meet Adam: First Home Buyer with a Plan

Adam came to us as a first home buyer in his late twenties. He had a stable job, earning $80,000 a year, $20,000 in savings, and a guarantor ready to back his loan. On paper, that’s a solid position. However, he also had an $18,000 HECS-HELP debt, which, according to the bank’s updated servicing calculators, significantly reduced his borrowing capacity.

We ran the initial numbers. Based on his income and outstanding student loan, the bank estimated it would take Adam 5.7 years to repay his HECS debt. With that timeline factored in, his borrowing capacity came to $376,000, and even when we added his savings to the mix, it wasn’t enough for the properties he’d been eyeing. Adam was disappointed. He didn’t want to scale back his expectations, but he also didn’t want to wipe out his savings. That’s where strategic mortgage broking stepped in.

Why Does HECS Affect Your Borrowing Power?

Many borrowers are surprised to learn that HECS, despite being interest-free, still acts like any other debt in the eyes of lenders.

Here’s why: your HECS repayment is tied to your income, and those repayments reduce your net income when banks assess your ability to repay a loan. So even if you’ve never noticed the HECS deductions on your payslip, they’re quietly affecting how much a lender thinks you can afford to borrow.

Under newer lending policies and the updated HECS calculator, banks model how long it will take you to repay that debt based on your current income and adjust your borrowing power accordingly.

The longer the repayment term, the more cautious they are, and the less they will lend you.

The Strategy: Balance, Not Elimination

Instead of advising Adam to pay off his HECS entirely, we examined three different repayment scenarios that could strike the right balance between debt reduction and savings preservation.

Option 1: Reduce HECS slightly to $16,000

By using just $2,000 of his savings to make a lump sum repayment, Adam brought his total HECS debt down from $18,000 to $16,000. This slight reduction shortened his projected repayment time from 5.7 years to 5 years. That single adjustment gave him a borrowing capacity of $455,000, a massive leap from his original $376,000 while still leaving him with $18,000 in savings. This allowed Adam to maintain a buffer for upfront costs, such as conveyancing, stamp duty, and even some furniture.

Option 2: Reduce HECS to $3,200

For this option, Adam would pay down a large chunk of his HECS using $14,800 of his savings. The new HECS balance would be just $3,200, and the debt would be cleared in around 1 year. His borrowing capacity jumped to $409,000, and he’d still have $5,200 in savings. Not bad, but not the best either.

Option 3: Wipe HECS Completely

Adam could choose to clear the full $18,000 HECS debt, using almost all of his savings. His borrowing capacity increased to $430,000, but that left him with just $2,000 to cover all other upfront home buying expenses.

So What Did Adam Do?

In the end, the most effective strategy wasn’t the one that cleared the most debt; it was the one that created the best combination of improved borrowing power and retained cash.

Adam chose Option 1: reduce HECS slightly, borrow more, and keep enough savings to move forward with his purchase confidently. This gave him breathing room for legal fees, pest and building inspections, lender application costs, moving expenses, and even a few creature comforts when setting up his new home. And the best part? He didn’t need to wait years to save more or increase his income.

What This Means for You

If you’re carrying a HECS-HELP debt and looking to get into the property market, don’t assume you need to pay it off entirely before applying for a home loan.

The key lies in strategic debt management, adjusting just enough to shift the bank’s servicing calculations in your favour while keeping your financial safety net intact.

It’s not just about income. It’s about how that income is presented to lenders, how your debts are calculated into that picture, and whether your broker is proactive enough to explore alternative scenarios, rather than going with the default.

Why Strategic Mortgage Broking Matters

Most online calculators and even some mortgage advisors use a one-size-fits-all approach when assessing your borrowing power. They don’t run detailed modelling or explore different repayment strategies that could dramatically change your result.

At I Know The Broker, we dig deeper. We test multiple scenarios based on your full financial picture, including your HECS, savings, income structure, and any support you may have from a guarantor or family.

That’s how we help people like Adam get into homes they thought were out of reach, not by asking them to give up their savings or delay their dream, but by being smarter with the options in front of them.

Same Income. Different Outcome.

Adam’s story is proof that with the same income and the same savings, your outcome can look completely different if you're working with someone who knows how to tilt the odds in your favour. If you're in a similar situation and unsure whether your HECS debt is holding you back, please reach out. Let’s see how we can make your money work harder and bring your first home closer.