Yes, but not the way most people think. Lenders don’t care about your HECS balance; they care about the compulsory repayment coming out of your pay. That repayment reduces your net income, and net income drives borrowing power.
How much difference does it make?
HECS repayments scale with income, from around 1% to 10% of pay. For a borrower on $110,000, that’s roughly $7,000–$8,000 a year of income the lender can’t count, which can trim borrowing capacity by $60,000–$100,000 depending on the lender’s model.
Should you pay it off before applying?
Sometimes. If your balance is small, under a year or two of repayments, clearing it removes the repayment entirely and can buy back serious capacity, often a better use of savings than a marginally bigger deposit. If the balance is large, paying it down partially achieves nothing: the compulsory repayment stays the same until the debt is gone. It’s all or nothing.
The 2026 wrinkles worth knowing
- Recent reforms cut student debt balances and lifted repayment thresholds, check your current balance on myGov before assuming.
- Some lenders have been directed to treat HECS more leniently when it’s close to being repaid, another policy gap brokers exploit.
- HECS doesn’t appear on your credit file and doesn’t hurt your credit score.
Run your borrowing power with your HECS repayment included in your commitments.
Open the borrowing capacity calculator →Whether to clear HECS, save a bigger deposit, or just pick a friendlier lender is a 10-minute modelling exercise. Ask Nathan before you drain the savings account.