If you have a HECS-HELP debt and you’re thinking about buying a home, the ground has shifted under you — mostly in a good way. Between the government’s 20% debt cut, a new repayment system, and a change in how lenders are allowed to treat student debt, many graduates on Sydney’s North Shore can now borrow more than they could a year ago. Here’s what changed and what it means for your borrowing capacity.
The 20% cut: your balance is smaller than you think
In 2025 the federal government cut every outstanding HELP balance by 20%, applied automatically by the ATO — no application needed. On the average debt of around $27,600, that was roughly $5,500 wiped. If you haven’t looked at your HELP balance since before the cut, check it through myGov before you apply for a loan: the figure a lender assesses may be meaningfully lower than you remember.
The new repayment system: smaller compulsory repayments
From the 2025–26 financial year, HELP repayments moved to a marginal system. You now repay nothing on income up to $67,000, and 15 cents in the dollar only on income above that threshold (up to $125,000). Under the old system, crossing the threshold triggered a repayment calculated on your whole income. Why does this matter for a home loan? Because lenders assess your compulsory HELP repayment as an ongoing expense. A smaller compulsory repayment means more surplus income in the lender’s serviceability calculator — and more borrowing power. As a rough rule of thumb, every $100 a month of compulsory repayment costs somewhere in the order of $15,000–$18,000 of borrowing capacity.
The biggest change: some lenders can now ignore your HELP debt
Following regulator guidance, lenders no longer have to treat HELP debt like a credit card or car loan. Key shifts include:
- HELP debts have been removed from the debt-to-income (DTI) figures banks report to the regulator, which helps borrowers who would otherwise sit near the high-DTI cap.
- Some lenders will now disregard smaller HELP balances entirely — for example, balances under a set threshold, on the basis they’ll be repaid soon.
- Several lenders apply tiered treatment: if your debt is expected to be cleared within a year or two, the repayment may be partially or fully excluded from your expenses.
Here’s the catch: every lender applies this differently. One bank may ignore your $18,000 HELP debt completely; another may assess the full repayment as an expense for the life of the loan. On the same income, that difference can move your maximum loan by tens of thousands of dollars.
What this means in practice
If you were told 12 or 18 months ago that your HECS debt was holding back your purchase in Chatswood, Willoughby, Artarmon, St Leonards, Lane Cove or Gordon, that answer may now be out of date. The combination of a smaller balance, lower compulsory repayments and friendlier lender policy means it’s worth re-running your numbers. And if your HELP balance is small, it’s worth asking whether paying it out before you apply — or simply choosing the right lender — gets you the better result. That’s exactly the kind of lender-by-lender policy comparison a broker does every day.
Talk to us before you assume you can’t borrow enough
Wonderful Global is a Chatswood-based mortgage broker serving Sydney’s North Shore. We’re available 24/7 and aim to provide a solution within 24 hours of receiving your documents, with service in English, Mandarin and Cantonese. Call +61 404 838 365 or contact us — or read more about how we help with a home loan.
This article is general information only and does not take your personal circumstances into account. Consider whether the information is right for you before acting on it.