Login
Home ownership to be ‘more achievable’ for young lawyers with student debt
Emerging legal professionals saddled with student debt will soon have an easier time securing greater bank loans under new guidance from the Albanese government.
Jerome Doraisamy
Treasurer Jim Chalmers has advised financial regulators to relax their positions regarding consideration of HELP (formerly HECS) debts when providing loans, thereby making it easier for Australians with such debt to responsibly take out a mortgage and buy a home.
In a statement last week, jointly issued with Minister for Housing and Minister for Homelessness Clare O’Neil, Minister for Education Jason Clare, and Assistant Treasurer and Minister for Financial Services Stephen Jones, Chalmers proclaimed this to be a “commonsense” change.
Currently, Chalmers noted, a barrier for young Australians to get into the housing market is the reluctance of banks to give them a mortgage.
“People with a HELP debt should be treated fairly when they want to buy a house, and we’re working with the regulators to make sure they are,” he said.
“By unlocking more finance from the banks, we’ll see more housing projects get off the ground more quickly.”
Speaking to Lawyers Weekly about the changes, Legal Home Loans director Cullen Haynes – who recently appeared on The Lawyers Weekly Show to discuss how smart lawyers can take advantage of looming cuts to the cash rate – said the proposal to exclude HELP from borrowing assessments could “significantly help” law students and young lawyers – especially those with substantial student loan balances.
“While HELP is often seen as ‘interest-free’, it’s subject to indexation, which means it increases over time. The way banks assess HELP impacts a lawyer’s income, not the balance itself. The higher the income, the larger the repayment and, therefore, the greater the effect on borrowing power,” he said.
For example, Haynes outlined, a young lawyer earning $100,000 plus super with a $50,000 HELP debt currently faces a $5,500 annual repayment at 5.5 per cent, which reduces borrowing power to between $441,000 and $539,000.
Under the new proposal, he noted, without HELP being factored in, “they could borrow between $596,000 and $608,000 – a difference of up to $69,000!”
Similarly, Haynes continued, a lawyer earning $150,000 with a $100,000 HELP debt faces a $14,520 annual repayment at 9.5 per cent, with their borrowing power reduced to between $607,720 and $739,000. “With the new legislation, their capacity could increase to between $739,000 and $883,000 – an increase of up to $131,280,” he said.
“Someone earning $160,000 + super could add $160,000 to borrowing power. The positive impact increases the higher the lawyer’s earnings.”
By excluding HELP debt, Haynes concluded, “the government would make home ownership more achievable for young lawyers, complementing exclusive benefits like waived LMI and lower deposit requirements”.
The Reserve Bank is meeting today and tomorrow (17–18 February) to discuss and determine whether to finally cut the cash rate after more than a year of leaving it at 4.35 per cent.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
You can email Jerome at:
