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Most business owners will have to approach a lender for capital at least once during their lifetime. Two common loan types you may encounter during your search are business loans and commercial loans. While they may seem interchangeable, these loan types serve different purposes and can impact how you finance your company’s growth and operations. In this blog post, we’ll define business and commercial loans and their uses so you can select the right solution for your borrowing needs. What is a business loan? A business loan is a broad term that includes various types of financing specifically designed for small to medium-sized enterprises (SMEs). These loans cover everyday business expenses, such as purchasing inventory, managing cash flow, investing in new equipment or expanding operations. Business loans are available in two types: secured and unsecured. A secured business loan asks for collateral, typically the property or equipment you are purchasing. On the other hand, an unsecured loan does not require collateral, though some lenders might request a personal guarantee to safeguard their repayments. In Australia, there are generally three types of business loans: Lines of credit - Similar to a credit card, lines of credit are flexible loans that allow businesses to draw funds up to a set limit as needed. Many businesses are profitable but sometimes struggle with cash flow. A line of credit can help business owners relieve cash flow pressures that arise in any business Invoice financing - One of the biggest issues small businesses encounter is delayed or unpaid invoices from merchants. Invoice financing refers to loans based on outstanding invoices, improving cash flow by bridging gaps caused by payment delays. Equipment loans - As the name suggests, equipment loans refer to financing for purchasing or leasing equipment. Many businesses opt for this type of financing when they need to upgrade equipment or expand their existing suite of tools. Universal Finance Corporation has decades of experience providing financing solutions for small, medium and large-scale businesses. We can also offer tailored financing solutions for acquiring a business to ensure you receive the right financial support. Our team of brokers thoroughly understands the complexities and financial demands involved in acquiring a business and can help you navigate the process with ease. How do commercial loans work? Commercial loans are larger-scale financing options that established businesses, corporations or developers typically use. They provide the necessary capital for various purposes that help businesses grow, expand and manage cash flow effectively. The length of a commercial loan has a range of up to 30 years. It's also common for commercial loans to include an initial interest-only period for the first few years before transitioning to standard principal and interest repayments. Commercial loans usually require collateral, typically the asset you want to purchase. If the borrower defaults, the lender has the right to seize the collateral to recover the outstanding loan amount. Some of the most common reasons business owners take out a commercial loan include: Purchase a commercial property - Many businesses secure commercial loans to acquire office buildings, retail spaces, warehouses or other property types to expand their operations. Owning a property is a stable asset for business owners and potentially reduces long-term costs compared to leasing. Remember that lenders typically assess the property’s value and your business’s overall financial health when determining your borrowing capacity, which could impact the amount you need to borrow. Expand business operations - Whether you’re planning on opening your doors at a new location, entering new markets or expanding your production line, a commercial loan can make it happen. Commercial loans can be used in this context to cover expenses related to hiring staff, marketing initiatives and infrastructure development or expansion. Fund large-scale construction projects - Commercial loans tend to fall within the same category as construction loans, enabling developers to fund large-scale projects such as building commercial spaces, multi-unit residential buildings or industrial facilities. Aside from land acquisition, a commercial loan can also cover costs associated with material purchases, labour and other development expenses. It's important to note that commercial loans vary in terms of lending criteria and structure, so comparing your options is essential to ensure you’re getting the most competitive deal. That said, not every business owner has the knowledge or time to sift through the business and commercial loans available. That’s why many are turning to the expertise and network of experienced brokers like the team at Universal Finance Corporation. We can provide insights into the most suitable financing options and guide you through the loan application process. Select the right lending solution for your business with Universal Finance Corporation Give your business the best chance at success by accessing the best commercial and business loans in Australia based on your financial needs. At Universal Finance Corporation , we understand choosing the right loan type is crucial - whether you’re looking to manage cash flow, invest in new equipment or embark on a significant commercial project. That’s why we do all the heavy lifting to find the right loan for you. Our brokers have access to a wide pool of lenders, from the Big Four banks to credit unions, various tested and trusted private lenders and online lenders, to ensure you receive the most competitive lending solution for your business’s needs. We’ll sit down with you to understand your business and its goals before determining your borrowing capacity and the type of loan you may qualify for. To learn more about how we can find the right business or commercial loan, get in touch with us today and schedule an appointment.

Whether you’re a freelancer or run your own business, it’s safe to say the standard nine-to-five working dynamic is no longer the norm. Unfortunately, lenders and banks are still playing catch-up to this way of working. When applying for a home loan, most lenders expect borrowers to submit extensive documentation, such as payslips, tax returns and financial statements, to verify income and financial stability — traditional forms of documentation you may not have access to. This is where a low-doc loan comes into play. In this blog post, we’ll explain what a low-doc loan is and how it can help you unlock property ownership. What is a low-doc loan? A low-doc loan is a mortgage option in which borrowers can provide alternative documentation to show their capacity to repay the loan. Although interest rates may be slightly higher than those on standard loans due to the additional risk for lenders, low-doc loans open up new opportunities for those who don’t fit the mould of conventional lending.  Who can benefit from a low-doc loan? Given their unique structure and requirements, low-doc loans are geared toward borrowers with unique or variable income structures. Some of the groups that can fall into this category include: Self-employed individuals — Small business owners, contractors and freelancers often have fluctuating incomes and may not have the traditional documentation that standard loan applications require, such as regular payslips. Investors with complex financial structures — Property investors with multiple income sources may find it difficult to present streamlined financial records that align with typical bank requirements. A low-doc loan can offer more flexibility in these cases. New Australians or recent business starters — Individuals who have recently moved to Australia or started a new business might not have an extensive financial history, making it difficult to qualify for a traditional mortgage. Fast and flexible financing when you need it — five benefits of low-doc loans in Australia While no two borrowers are the same, every applicant deserves the opportunity to own property. And if you’re considering a low-doc loan to fund your upcoming property purchase, you can look forward to the following five benefits: 1. Flexible documentation requirements Low-doc loans accept alternative financial evidence, such as bank statements, Business Activity Statements (BAS) or an accountant's letter, to support the loan application. This makes showcasing your borrowing capacity and creditworthiness easier for prospective lenders. 2. Access to property investment opportunities For many Australian investors, proof of finances isn’t always as cut and dry as a simple bank statement. Investors who lack clear-cut financial records can still access financing through low-doc loans, allowing them to take advantage of new and emerging investment opportunities. 3. Faster application process The loan application process tends to be quicker without the need to gather extensive paperwork, which is beneficial for borrowers looking to secure financing quickly to purchase their dream property. 4. Tailored repayment options Depending on the lender’s offerings, you may be able to secure a low-doc loan that aligns with your lifestyle and payment cycle. For instance, some lenders offer repayment flexibility, such as customised repayment schedules, to cater to borrowers with varying cash flows. 5. A pathway to borrowing for new business owners Entrepreneurs and newly self-employed individuals can use low-doc loans to invest in property or refinance existing loans, even without a long history of financial documentation. How a mortgage broker can help you find the right low-doc loan for your needs As we’ve gathered, low-doc loans aren’t your run-of-the-mill home loan. They demand a deep understanding of how they work, which is why many savvy Australians are now turning to the expertise of a mortgage broker to guide them through the process. Here’s how a mortgage broker can assist you with your low-doc loan: Identifying suitable lenders based on your financial profile — Not all lenders offer low-doc loans. A mortgage broker can help match you with lenders more inclined to approve your application based on your financial situation. Navigating complex requirements — Brokers understand the complexities of the low-doc loan process. They guide you on what documentation will be accepted and ensure your application is strong and compliant with the lender’s expectations. Negotiating rates on your behalf — Mortgage brokers have access to a wide pool of lenders and can negotiate more competitive loan terms, helping you secure the best possible deal. Saving time and reducing stress — Brokers handle most of the legwork involved in applying for a low-doc loan, from comparing products to liaising with lenders, freeing up your time and reducing the stress of the lending process. Find the right low-doc loan with Universal Finance Corporation At Universal Finance Corporation , we specialise in connecting borrowers with the most competitive lending solutions. Whether you’re self-employed, an investor or simply lack the traditional paperwork required by other lenders, we can help you navigate the process and find a low-doc loan that best aligns with your needs. With more than 30 years of experience by your side, you can trust Universal Finance Corporation to manage your loan application. To learn more about our services, please contact us today.

Whether you’ve been paying attention to the latest market movements or looking for ways to create more breathing room in your budget, you may be considering refinancing . Put simply, refinance home mortgage loans refers to replacing your current home loan with a more competitive offer. However, it's essential to understand both the advantages and potential drawbacks of refinancing before making a decision. That's why, in this blog, we’ll explore the benefits of refinancing, helping you determine if it's the right choice for you. Pros of home refinance loans 1. Possibly get a lower interest rate One of the main reasons homeowners opt for refinancing is to take advantage of the lower interest rates. Securing a lower rate can significantly reduce monthly mortgage payments and the total interest paid over the duration of the loan. With a more competitive interest rate working in your favour, you can look forward to the following financial benefits: Lower monthly payments — A lower interest rate can reduce your monthly mortgage payments, freeing up cash for other expenses. Long-term savings — Even a slight reduction in the interest rate can lead to substantial interest savings over the term of your loan, allowing you to use your income towards other financial goals. 2. Use the equity for cash The benefits of refinancing enable you to tap into the equity you’ve built in your home, turning it into cash that you can use for various purposes, including: Home improvements — Use the funds to renovate or upgrade your home, potentially increasing its value should you ever decide to sell. Projects such as kitchen remodels, bathroom makeovers or adding a deck can enhance your home's livability and market value. Debt consolidation — Pay off lingering, high-interest debts, such as credit cards or personal loans, through debt consolidation. This can simplify your finances, reduce the stress of paying off multiple debts and save you money on interest payments. Major purchases — With your newfound funding, you can finance significant expenses like education, medical bills or a new car without taking on additional debt. 3. Lock in your rate and feel more secure with your monthly repayments If you currently have a variable rate, refinancing to a fixed-rate loan can provide greater security and predictability in your monthly payments. Here are some of the most common benefits of switching to a fixed rate: Predictable payments — Fixed-rate loans offer consistent monthly payments, making it easier to budget, manage and plan your finances. Protection from potential rate increases — Locking in a fixed rate protects you from potential interest rate hikes, providing peace of mind and financial security. Cons of home refinance loans 1. Refinancing can be expensive Refinancing involves various costs and fees, which can add up and potentially offset the savings from a lower interest rate. This can include: Closing costs — These can include appraisal fees, origination fees, application fees and more, which can range from 2% to 5% of the loan amount. Break-even point — It’s crucial to calculate the break-even point, which is when the savings from the lower interest rate outweigh the refinancing costs. If you plan to move or sell your home before reaching this point, refinancing might not be worth it. 2. You may encounter lower-than-anticipated appraisals A lower-than-expected home appraisal can impact your ability to apply for a home refinance loan, particularly if you aim to cash out equity or secure a lower interest rate. Equity requirements — Lenders may want to see a specific amount of equity in your home to approve a refinance. A low appraisal can reduce your equity, making it harder to qualify. Higher interest rates — If the appraisal comes in lower than anticipated, you might end up with a higher interest rate or less competitive loan terms, which could negate the financial benefits of refinancing. 3. It may not be worth it In some cases, refinancing might not provide the financial benefits you’re hoping for, and it could even be not worth the effort. Here are a couple of things to be aware of: Minimal savings — If the interest rate reduction is minimal, the savings might not justify the refinancing costs. You need to carefully analyse whether the potential monthly savings are enough to make refinancing worthwhile. Extended loan term — Refinancing to a new 30-year loan can extend your repayment period, potentially increasing the total interest paid over the life of the loan. While your monthly payments might decrease, you could end up paying more in interest over time. Work with Universal Finance Corporation — Sydney’s most trusted mortgage brokerage firm If you’re thinking about refinancing your home loan, the team at Universal Finance Corporation can help you find the right solution. We partner with a wide pool of lenders, from major banks to non-bank lenders, to ensure you receive the best refinance rates for home loans for your circumstances. We’ll discuss your goals, borrowing capacity and other factors that make up your financial profile so we can make sure you’re matched with the most appropriate solution. Book a consultation today and discover how we can help you switch to a more competitive home loan.

As a first home buyer, there are many challenges you will need to work through before you receive the keys to your new home. However, many first home buyers may agree that the greatest hurdle is saving for a home loan deposit. Recognising this financial strain, the Australian government has released various schemes and initiatives to get first-time buyers into the property market. The First Home Buyer Guarantee (FHBG) program is part of the Home Guarantee Scheme (HGS), which offers a valuable opportunity for first home buyers to enter the property market with as little as a 5% deposit. This comprehensive guide will explore what the First Home Guarantee Scheme is, how it works, who is eligible and the steps you need to take to benefit from this initiative. What is the First Home Guarantee Scheme? The First Home Guarantee (formerly known as the First Home Loan Deposit Scheme ) is an Australian government initiative designed to help first-time home buyers purchase a home sooner. Under this scheme, eligible first-time home buyers can purchase a property with a deposit as low as 5% without needing to pay for Lenders' Mortgage Insurance (LMI), a protection designed to safeguard the lender should the borrower default on their mortgage. How the First Home Guarantee Scheme works Under the first home buyers' guarantee, the government acts as a “guarantor” on the loan, covering up to 15% of the deposit, thus allowing lenders to offer loans to first home buyers with lower deposits. Here's a step-by-step breakdown of how it works: Government guarantee — The government guarantees up to 15% of the loan, which means you only need to provide a 5% deposit. This guarantee is a win-win for borrowers and lenders, as the FHBG helps the borrowing process run more smoothly while reducing the lender's risk traditionally associated with applicants with a deposit below the 20% mark. Lenders Mortgage Insurance (LMI) — Normally, if you have a deposit of less than 20%, you would need to pay for LMI. This is because lenders tend to view applicants with smaller deposits as “risky” borrowers. The FHBG eliminates this cost, potentially saving you thousands of dollars. Loan application — You apply for a home loan through one of the scheme's participating lenders. The lender will assess your application and determine if you qualify for the FHBG Property purchase — Once approved, you can proceed with purchasing your home with a deposit of just 5%. Qualifying for the First Home Buyer Guarantee Scheme — eligibility criteria While the first home buyer guarantee sounds like a dream for many first-time buyers, there are a few eligibility requirements you must meet before you can apply. These requirements cover applicant details, property type and the loan you intend to use. 1. Your details Aside from never having owned property before, applicants must: Be an Australian citizen or permanent resident. Have a taxable income of up to $125,000 per annum. For couples, the combined taxable income must be up to $200,000 annually. 2. Property type While you are able to purchase a free-standing property or apartment, you must ensure: The property is an existing house, townhouse or apartment, a house and land package, a spot of land with a contract to build a home or an off-the-plan apartment or townhouse. The property must be intended for owner-occupancy, meaning you plan to live in the property as your primary place of residence. The property's value must not exceed the price cap in the state you intend to purchase in. For instance, in New South Wales, properties within the capital city and regional centre are capped at $900,000. To find out your state’s specific price caps, check out the Housing Australia Property Price Cap tool. Keep in mind that since applicants must be owner-occupiers, investment properties are excluded from the FHBG. Potential downsides of the First Home Buyer Guarantee Scheme If you believe you are eligible for the FHBG and are considering applying, it’s important to do your research to ensure you know the potential setbacks you may encounter. This can include: Limited spots — The FHBG is capped at a certain number of places each financial year. Once the cap is reached, no further guarantees will be offered until the following year. At the time of writing, there are 35,000 places available for the 2024/2025 financial year. Property price caps — The scheme's property price caps may limit your choice of properties, particularly in high-demand areas. Qualification criteria — Not all first home buyers will meet the eligibility criteria, which can restrict access to the scheme. Ensure you double-check your eligibility before submitting your application. You can use the Housing Australia Eligibility Tool to assess your qualification for the FHBG. Loan terms — Even if you qualify for the FHBG, you must still meet the lender's credit and loan criteria, which can include factors such as a healthy credit score and financial stability . How a mortgage broker can help you prepare your application for the FHBG There’s a lot to stay on top of when considering applying for the FHBG scheme. Commonly recognised for their invaluable assistance during the home loan application process, a mortgage broker’s expertise also extends to the FHBG, where they can provide: Expert advice — Mortgage brokers have extensive knowledge of various government property schemes and initiatives, including the FHBG, and can help you determine if you are eligible or suggest alternative pathways. Access to lenders — Mortgage brokers have access to a wide range of lenders and can help you find a participating lender that suits your needs. Application assistance — They can guide you through the application process for your home loan and the FHBG, ensuring all documentation is correctly submitted and increasing your chances of approval. Start your property journey with Universal Finance Corporation Know you’re making the right decision during your search for the perfect property with Universal Finance Corporation. We’ve guided many first home buyers through the complexities of the First Home Buyers Guarantee Scheme, helping them achieve their long-term financial goals. Find out if you’re eligible for the First Home Buyers Guarantee Scheme by booking a consultation with us today.

Purchasing a car is a significant financial decision, so it’s crucial to find the right financing option that’s affordable and manageable. In Australia, several car finance options are available to suit different needs and financial situations. In this blog, we’ll assess the various types of car financing options in Australia, including secured and unsecured car loans, dealership financing, balloon payments, peer-to-peer (P2P) lending and more. We’ll also discuss the benefits and considerations of each to help you make an informed decision. 1. Secured car loans A secured car loan is one kind of car loan where the vehicle you purchase serves as collateral for the loan. Simply put, if you default on the loan, the lender has the right to repossess the car. Secured car loans generally come with lower interest rates compared to unsecured loans because the risk to the lender is reduced. Benefits of secured car loans Lower interest rates Higher borrowing limits Longer repayment terms Considerations for secured car loans Risk of repossession of the car or vehicle if you default on the loan May require a higher credit score for approval 2. Unsecured car loans An unsecured car loan doesn't use the vehicle as collateral. Instead, the loan takes into account your creditworthiness and ability to repay . Because no collateral is involved, unsecured car loans usually have higher interest rates and stricter lending criteria. Benefits of unsecured car loans No risk of repossession Can be used to purchase any vehicle, including used cars from private sellers Considerations for unsecured car loans Higher interest rates Lower borrowing limits Stricter approval criteria 3. Car dealership financing Many car dealerships in Australia offer car financing options directly to buyers. Car financing from dealerships can be convenient as it allows you to arrange the purchase and financing in one place. These loans can be either secured or unsecured, depending on the dealership's terms. Benefits of car dealership financing Convenience of one-stop shopping Promotional rates and offers (for instance, 0% interest for a limited time) Considerations of car dealership financing Interest rates may be higher than those from banks or credit unions Limited to vehicles sold by the dealership 4. Balloon payments With balloon payment, a lump sum is paid at the end of a loan term. This type of car financing allows you to make lower monthly payments throughout the term, with a larger payment due at the end. Balloon payments are often used with secured car loans or dealership financing. Benefits of balloon payments Lower monthly payments Can make expensive cars more affordable in the short term Considerations of balloon payments Large payment due at the end of the term Requires careful financial planning to ensure you can make the final payment 5. Peer-to-Peer (P2P) lending P2P lending platforms connect borrowers directly with private individual lenders. This type of financing can offer competitive interest rates and flexible terms. Depending on the platform as well as the agreement between the borrower and lender, P2P loans can be either secured or unsecured. Benefits of P2P lending Competitive interest rates Flexible terms and conditions Potential for faster approval and funding Considerations for P2P lending Variable interest rates depending on the lender Limited protection compared to traditional lenders Requires thorough research to find reputable platforms 6. Novated lease A novated lease is a three-way agreement between you, your employer and a finance company. Your employer makes the car leasing payments directly from your pre-tax salary, which can reduce your taxable income and provide potential tax benefits. Benefits of a novated lease Potential tax savings Convenient payroll deductions Flexibility to include vehicle running costs in the lease Considerations for a novated lease Dependent on employer participation May not be suitable for all employment situations Potential for higher overall costs if not managed properly 7. Chattel mortgages A chattel mortgage is a type of loan designed for business use. The lender funds the purchase of the vehicle, and you immediately take ownership of the car. The lender then takes out a mortgage on the car as security for the loan. Benefits of chattel mortgages Ownership of the vehicle from day one Potential tax benefits for business use Flexible repayment terms Considerations for chattel mortgages Available only for business use Risk of repossession of the car or vehicle if you default on the loan Unlock some of the most competitive car financing options in Australia with Universal Finance Corporation With so many car finance options around, it can be hard to know which is the right option for you, your lifestyle and your finances — and it’s why more savvy Australians are turning to the help of an experienced mortgage broker . A broker can provide valuable assistance in navigating various car finance options and finding the best deal for your needs. They do all the heavy lifting during the car financing process, from matching you with the right lending solution to submitting your application. Universal Finance Corporation is a trusted broker with extensive experience helping clients secure the right car finance. Contact us today to book a consultation and let us help you drive away in your dream car with the best financing solution tailored to you.

Whether you’re looking to create more wiggle room in your budget or want to take advantage of different loan features, refinancing your home loan could be your best bet. For many Australians, refinancing your home loan can be a strategic move to secure a more competitive offer and save money in the long run. However, if you've never gone through the process, it can seem daunting. This blog will provide insight into the benefits of refinancing, how it works and how a mortgage broker can assist you in finding the best refinance options. What is refinancing?  Home loan refinancing involves replacing your existing home loan with a new one, usually with a lower interest rate and a different loan contract. Your new home loan then pays off the balance of your previous loan, with you making regular monthly payments on the new loan. Here are some of the main reasons you may want to refinance your home loan: Lower interest rates — One of the top reasons to consider refinancing is the lower interest rates. Even a small reduction in the interest rate can lead to massive savings over the duration of the loan. Reduced monthly payments — By switching to a lower interest rate or extending the loan term, you’ll be able to reduce your monthly payments. Shorter loan term — Some homeowners refinance to shorten their loan term. For instance, moving from a 30-year loan to a 15-year loan can help you clear your debt faster and shave off your interest payments. Access to home equity — Refinancing can allow you to use your home's equity. This can be useful for funding home renovations, getting debt-free or covering other significant expenses. Switching loan types — You might want to switch from a variable-rate mortgage to a fixed-rate mortgage, depending on your budget and current market conditions. Your fixed-rate period is ending — If you initially took out a fixed-rate loan and the fixed rate is ending, you may want to consider refinancing your home loan. Once the fixed rate expires, your loan typically reverts to the lender’s standard variable rate, which can be higher and more costly than your original fixed rate. How a mortgage broker can help you refinance your home loan Before you can get started refinancing your home loan, understanding the process is important. Without third-party assistance, the process of refinancing your home loan would include the below steps, which we would facilitate and guide you through: Evaluate your financial situation — Assess your current financial status, including your credit score, income and existing mortgage details. It’s also a good idea to determine your refinancing goals, such as lowering your interest rate or accessing equity, so you have an understanding of what you’re looking for. Research and compare lenders — While it might be easier to refinance with your existing lender, they may not be able to provide the most competitive offer. Browse and compare offers from different lenders, considering interest rates, loan terms, fees and other conditions. Application — Submit an application with the chosen lender. You'll need to provide financial documentation, similar to when you first applied for your mortgage. Appraisal and underwriting — Usually, the lender will require a home appraisal to determine the current value of your property . They will also review your financial information to ensure you meet their lending criteria. Loan approval — If approved, you'll sign the new loan agreement, and the lender will clear your existing mortgage. You'll then start making payments on the new loan. The benefits of using a mortgage broker to refinance your home loan Navigating the refinancing process can be complex, but a mortgage broker can simplify the journey and help you find the best options. Here's how a broker can add value and take the stress off your shoulders: Expert advice — A mortgage broker provides expert advice tailored to your financial profile and goals. They can also explain the pros and cons of refinancing and determine if it's the right move for you. Access to multiple lenders — Brokers have access to a wide range of lenders and lending solutions, increasing your chances of finding a better deal than you might on your own. Comparison shopping — Brokers also do the legwork of comparing different refinancing offers, saving you time and effort in finding the right solution. Application assistance — They offer guidance through the application process by helping you gather the necessary documentation and ensuring your application is complete and accurate. Interest rate negotiation — Brokers often have long, positive relationships with the lenders they partner with and can negotiate with lenders to secure competitive terms and conditions. Make the switch to a more competitive home loan with Universal Finance Corporation Refinancing your home loan can be a way for you to achieve better financial terms and save money, and having the right team by your side can make all the difference in your refinancing experience. Universal Finance Corporation is a trusted mortgage broker with extensive experience helping homeowners refinance their loans. We do all the heavy lifting while providing expert guidance to help you find the best home loan refinancing options. Contact us today to book a consultation and learn how we can assist you in achieving your refinancing goals.

From pay slips to bank statements, a lender needs to see many things when you apply for a home loan. Personal debt is also a major consideration for lenders, and one common concern among Australians is how their HECS debt might impact their ability to secure a home loan. In this blog, we'll explore what HECS debt is, how it's repaid, how lenders treat HECS debt, how to check your HECS debt and other types of debt considered during the lending process. What is HECS debt?  HECS-HELP (Higher Education Contribution Scheme-Higher Education Loan Program) is a government loan scheme that helps eligible students pay for their university education. The debt accrued under HECS-HELP covers tuition fees, and students are required to repay this debt once their income reaches a certain threshold. Here’s how the repayment process works: Income threshold — HECS debt repayments begin once your income exceeds the minimum repayment threshold, which is adjusted annually. For the 2023-2024 financial year, the threshold is $48,361. Repayment rates — The repayment rate ranges from 1% to 10% of your income, depending on your earnings, where higher income levels result in higher repayment rates. Automatic deductions — Repayments are automatically deducted from your salary by your employer, similar to tax withholdings. Voluntary repayments — You can also make voluntary repayments to reduce your HECS debt faster, which can be beneficial if you're planning significant financial commitments like applying for a home loan. How lenders treat HECS debt When applying for a home loan, lenders assess your overall financial situation, including any existing debts. Here's how HECS debt may affect your home loan application: Impact on borrowing capacity — HECS debt reduces your disposable income, impacting your borrowing capacity . Lenders consider your monthly HECS repayments as part of your financial obligations. Serviceability assessment — All lenders perform a serviceability assessment to determine whether you can manage the home loan repayments along with your other debts, including HECS. A high HECS repayment can lower your borrowing power. Credit history — Unlike other forms of debt, HECS debt does not appear on your credit report. However, lenders will still take your credit history into account when evaluating your financial situation. Debt-to-income ratio — HECS debt contributes to your overall debt-to-income ratio, a key metric lenders use to assess your ability to repay the loan. How to check your HECS debt Having an overview of your financial situation can help you prepare for your home loan application. Knowing the exact amount of your HECS debt is crucial when planning to apply for a home loan. Here's how you can check your HECS debt: Log into your MyGov Account — Using your unique username and password, log in to your MyGov account linked to the Australian Taxation Office (ATO). Navigate to the ATO Online Services — Access the ATO online services through MyGov. Here, you can view your HECS-HELP balance, repayment history and current debt status. View your individual tax return — Your annual tax statement will also provide details of your HECS debt and any repayments made during the financial year. Contact ATO for further assistance — If you have trouble accessing your account online, you can contact the ATO directly for assistance. Other types of debt that lenders consider during your application In addition to HECS debt, lenders consider other types of debt during the home loan application process. These include: Credit card debt — Lenders assess your credit card limit(s) and minimum monthly repayments. But does HECS affect your borrowing capacity? The answer is yes; credit card debt can significantly impact your borrowing capacity. Many lenders may also see non-utilised lines of credit as a liability, so it’s a good idea to close unused credit cards before submitting your application. Personal loans — Any existing personal loans are factored into your debt-to-income ratio, as your repayments can reduce your borrowing capacity. Lenders will consider the outstanding balance and monthly repayments. Car loans — Similar to personal loans, car loans are included in your financial assessment. The remaining balance and repayment obligations are taken into account. Alternative debts — This includes any other financial obligations such as store cards, payday loans, Buy Now Pay Later services and any other regular debt repayments you may have. Four tips to improve your chances of being home loan approved To enhance your chances of securing a home loan, consider the following tips: Reduce existing debts — Reducing your credit card limits, paying down credit card balances and personal loans can improve your debt-to-income ratio and increase your borrowing capacity. Review your budget — Ensure your budget accounts for all financial obligations, including HECS debt. A clear, manageable budget can reassure lenders you are responsible when it comes to managing your finances. Maintain stable employment — Lenders prefer applicants with a stable income and want to see at least two to three payslips, so avoid changing jobs or industries before applying for a home loan. Seek professional advice — A mortgage broker simplifies the home loan application process, from comparing lenders on your behalf to preparing and submitting your application. Let Universal Finance Corporation manage your home loan application If you’re about to begin your search for the right home loan, make Universal Finance Corporation your first step. Our team has great expertise in managing HECS debt and other financial commitments and can help you present a strong application to potential lenders. Contact us today to book a consultation and take the first step towards securing your dream home.