Student Loans – Solve Your Debt Woes Fast (2026)

Student loans are often the cornerstone of higher education financing, providing essential support to those pursuing academic goals. However, the interplay between student loans and other financial commitments can be complex, especially when considering other major financial steps such as purchasing a home. For many Australians, the pressing question arises: can student loans impact your ability to secure a mortgage in 2026?

Understanding Student Loans and Mortgages

In Australia, student loans are typically HECS-HELP loans, part of the Higher Education Loan Program (HELP). These loans allow students to defer their tuition costs until they reach a certain income threshold, at which point repayments are automatically deducted from their salary. As of 2026, this threshold is set at $51,550 per annum. The interest rate on HECS-HELP loans is indexed to inflation, ensuring that the debt grows in real terms but does not accrue traditional interest.

When it comes to mortgages, lenders assess various factors to determine your borrowing capacity, including income, expenses, and existing debts. Student loans can factor into this assessment, potentially affecting your ability to qualify for a mortgage or the amount you can borrow.

Student Loans and Mortgage Eligibility

Understanding how student loans influence mortgage eligibility is crucial for prospective homebuyers. Lenders consider your overall debt-to-income ratio (DTI) when assessing applications. A high DTI, which includes any HECS-HELP repayments, can limit your borrowing capacity.

Current interest rates for home loans in Australia as of 2026 range from 6.49% to 12%, depending on the lender and loan type. Lenders on Esteb and Co's panel of 83+ lenders may offer varying terms based on your financial profile.

Steps to Manage Student Loans and Mortgage Applications

Successfully navigating the home loan process while managing student debt involves a series of strategic steps:

1. Assess Your Financial Situation: Calculate your current income, expenses, and any outstanding debts, including your HECS-HELP balance and repayment obligations.
2. Improve Your Credit Score: Ensure your credit report is accurate and address any discrepancies. A higher credit score can improve your loan terms.
3. Reduce Other Debts: Pay down high-interest debts to lower your overall DTI. This can enhance your borrowing capacity.
4. Consult a Mortgage Broker: Engage with a broker from Esteb and Co to explore options across their extensive lender panel, tailored to your financial situation.
5. Prepare Documentation: Gather necessary documents, including payslips, tax returns, and a summary of your HECS-HELP debt.
6. Apply for Pre-Approval: Secure pre-approval to understand your borrowing capacity and demonstrate your seriousness to sellers.
7. Choose the Right Loan Product: Work with your broker to select a loan that offers favourable terms, balancing interest rates and repayment flexibility.

Expert Tips and Considerations

Here are some expert tips to consider when balancing student loans and mortgage applications:

• Understand Indexation: Keep track of the annual indexation on your HECS-HELP debt, ensuring that you are aware of how it impacts your total debt.
• Utilise Resources: Use online calculators to simulate different scenarios, helping you understand how additional repayments or salary increases can alter your financial landscape.
• Aim for Stability: Lenders favour stable employment, so maintaining a consistent job history can enhance your mortgage application.
• Consider Extra Repayments: If financially feasible, make additional repayments on your HECS-HELP debt to reduce your outstanding balance and improve your DTI.
• Stay Informed: Regularly review the latest financial news and updates to remain aware of any changes in lending policies or HECS-HELP regulations.

Frequently Asked Questions

1. How do HECS-HELP loans affect my mortgage application? HECS-HELP loans are considered in your debt-to-income ratio, which can affect the amount you can borrow.
2. What is the current income threshold for HECS-HELP repayment in 2026? The repayment threshold is $51,550, above which repayments are automatically deducted from your income.
3. Can I still get a mortgage if I have a significant HECS-HELP debt? Yes, though it may reduce your borrowing capacity. Working with a mortgage broker can help you find suitable options.
4. What interest rates can I expect for home loans in 2026? Home loan rates range from 6.49% to 12%, varying by lender and loan type.
5. Should I repay my HECS-HELP debt before applying for a mortgage? It depends on your financial situation. Reducing debt can improve borrowing capacity, but balancing repayments and savings for a deposit is crucial.
6. How can Esteb and Co help with my mortgage application? Our experienced brokers can guide you through options across 83+ lenders, ensuring you find a loan that suits your needs.
7. Are there any benefits to repaying HECS-HELP early? While there are no financial incentives to repay early, reducing debt can improve your financial standing for other borrowing.