Two Teachers, One HECS Problem, and the Home They Didn't Think They Could Afford
Written By Kate Sadler - Mortgage Broker Noosaville - The Broker Society
Two teachers walked into our office with a good deposit, two solid incomes, and a problem that kept showing up on every borrowing capacity calculation we ran. Their HECS debt.
Not because they'd overspent on their degrees. Because they'd done exactly what you're meant to do. Studied, qualified, and started teaching. And the Sunshine Coast property market didn't care that their HECS balances were a direct result of becoming the professionals they now were.
The First Home Buyer Problem Nobody Warns You About
When we first ran the numbers, the gap was obvious. Their combined HECS debt was pulling their borrowing capacity down well below what they needed for a home on the Sunshine Coast. Not by a small margin either. Enough that some of the homes they'd been looking at were simply off the table.
This is a familiar story for teachers, nurses, and anyone else who studied for years to earn a HECS-HELP debt on the way to a stable, well paid career. The debt sits there on paper looking like a liability. What most people don't realise is that it doesn't sit there the same way with every lender.
Why Lenders Don't All Treat HECS the Same Way
Some banks look at your HECS repayment as a fixed, ongoing commitment and factor it into your servicing at face value, as if that repayment amount is locked in forever. Other lenders take a longer view. They recognise that a HECS debt isn't a 30 year mortgage. It's a debt that reduces as your income grows, and eventually disappears altogether.
For two early career teachers, that distinction matters enormously. Their salaries were only going to increase as they moved through the classification structure and took on more responsibility. A lender who assessed their HECS as a static, permanent drag on their income wasn't looking at the full picture. A lender who modelled it over its actual lifespan was.
We went looking for the second kind of lender.
The Move That Changed Their Borrowing Capacity
Here's where it got interesting. Some lenders will assess a HECS debt based on it being paid off over the standard long timeline. Others will take into account a shorter payoff period if the numbers support it. In this case, by making a modest reduction to their HECS balance, our clients shifted their debt into a position where a lender could reasonably assess it as being cleared within about five years instead of drawing it out over decades.
That one adjustment changed how their file read to the bank. Their compulsory repayments were reassessed more favourably, and their borrowing capacity moved by a meaningful amount. Not because they earned more. Not because they found extra savings. Because the debt itself was recalculated in a way that reflected where they actually were in their careers, not a worst case scenario stretched out over 30 years.
If any of this sounds familiar, it's worth reading our other case study on HECS and borrowing power, where we walked a different client through why we told them to stop paying their HECS debt off, not start.
Higher Borrowing Capacity Doesn't Mean You Have to Use It
This is the part we think gets skipped too often in first home buyer conversations. Once the numbers opened up, our clients technically qualified for a bigger loan than they'd originally planned for. A lot of buyers would take that number and run with it, chase the biggest home the bank will approve.
Our clients didn't want that. When we sat down and talked through what actually mattered to them, one thing came up clearly. They didn't want their mortgage repayments to be more than one of their wages. Not because a lender told them that was a rule. Because that was the number that let them sleep at night.
So we didn't just solve for approval. We solved for comfort.
That meant building their loan structure around a repayment level that left room for two teachers' salaries to cover their life, not just their mortgage. Holidays, the odd renovation, unexpected costs, all of it still fitting inside their budget without the home loan swallowing everything else. Borrowing capacity tells you what a bank will lend. It has never told you what you should actually take on.
What This Case Study Actually Comes Down To
Two teachers (First Home Buyers) came to us thinking their HECS debt had priced them out of the Sunshine Coast. It hadn't. What had actually happened was that the wrong lender's assessment method was doing the pricing out, not the debt itself.
Once we found a lender who assessed their HECS realistically, and made a small adjustment to how that debt would be paid down, their options opened up. Then we did the part that matters just as much as the approval. We built their repayments around what felt sustainable for their life, not around the maximum number a spreadsheet would allow.
That's the version of first home buying we think more people deserve. Not the biggest loan you can get approved for. The right loan for how you actually want to live.
If you're a teacher, nurse, or anyone else sitting on a HECS balance and assuming it rules you out of buying, it's worth getting a proper look at your numbers before you believe that. It's also worth reading up on LMI and what it actually costs first home buyers, since your deposit size and LVR are the other half of this equation.
We work across first home buyers, refinancing, and investment loans, and HECS debt shows up in conversations across all three. Wherever you're at, it's worth getting the full picture before you assume what you can or can't do.
Got a HECS Balance and Wondering What It Means for Your Borrowing Power?
Don't take one lender's word for it. Different banks assess HECS differently, and the right structure can change what you're able to borrow, and what you're comfortable repaying.
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Disclaimer
Everything on this blog is general information only. It's not personal advice, and it doesn't take into account your income, goals, or situation, because we haven't met you yet.
Lending policies, rates, and criteria change regularly and can vary between lenders, so anything specific mentioned here may not reflect current conditions by the time you're reading it. Case studies and examples are based on real client scenarios, but names and identifying details are changed, and outcomes depend entirely on individual circumstances. What worked for one client won't automatically work the same way for you.
Nothing on this blog should be treated as credit advice, financial advice, tax advice, or legal advice. Before making any decisions about a loan, refinance, or property purchase, talk to us directly, or speak with an appropriately qualified professional who knows your full situation.
The Broker Society operates under an Australian Credit Licence and takes compliance seriously. This blog exists to help you understand your options, not to replace an actual conversation with a broker.
