Why a Strong Accountant Salary May Not Mean Strong Borrowing Power

Tom and Mel looked like straightforward borrowers. Both were accountants, both had clean credit, and together they earned almost $187,000 a year. Tom earned about $89,000 and Mel about $97,500. They had no car finance or personal loans, but they each carried around $35,000 of HELP debt.

They had found a home around the $1 million mark that suited where they wanted to live and gave them room to stay for a while. Their own budget worked. The lender calculators did not.

Across most lenders, their estimated borrowing power sat at about $850,000. Once their deposit and buying costs were allowed for, they were looking closer to $900,000 properties.

This is where a strong salary can be misleading. The income was not the problem. The way most lenders treated the compulsory HELP repayments was pulling down the result.

The obvious fixes were not good ones. They could lower the target, or clear the full $70,000 of HELP debt. One meant compromising on the property. The other meant using most of the savings they needed for the deposit and costs.

So I worked backwards from the outcome they wanted. How much of the HELP debt actually needed to go? Was there a lender that would assess the remaining balance differently? And could we solve the deposit without adding Lenders Mortgage Insurance?

The policy difference

Most lenders only make an exception for HELP debt when the remaining balance is expected to be fully repaid within the next 12 months. One lender has an alternate assessment when the debt is expected to be cleared within five years.

Tom and Mel were just outside that five-year window. They did not need to clear $35,000 each. They needed to reduce each balance by about $7,000, bringing both debts down to roughly $28,000.

That $14,000 payment changed the policy applied to their application. Their estimated borrowing power moved from around $850,000 to about $950,000.

The key was not paying HELP down for the sake of it. A voluntary payment only makes sense when it creates a measurable lending benefit and leaves enough cash to complete the purchase. Read more about how HELP debt affects borrowing power before deciding whether to make a payment.

The deposit needed a separate solution

Tom and Mel used the Australian Government 5% Deposit Scheme. They paid no Lenders Mortgage Insurance and kept more of their savings for the deposit, buying costs and a buffer after settlement.

Eligible accountants may also qualify for professional LMI waivers. Those policies can be valuable, but they often work with a different deposit requirement. In this case, the government scheme suited Tom and Mel’s savings position, while the HELP policy solved the borrowing-power problem.

The two policies did different jobs. Looking at only one would not have got them into the right home.

Moving into partnership or starting a practice

The other situation I see regularly is an accountant moving into partnership or starting their own practice. It can be a strong career move and still push a property plan back if the new income is not yet documented in a way a lender can use.

Under standard policy, many lenders still want two full years of business income. Depending on the structure and lender, I also check three practical pathways: two years of Notices of Assessment, a regular PAYG salary paid from the accountant’s own business, or a policy that may consider around 18 months on an ABN or one year of financials.

These are not shortcuts. The business still needs to be profitable and the income sustainable. But checking the pathways before leaving employment can be the difference between buying on schedule and being told to wait another year or two.

Back to Tom and Mel

Tom and Mel did not get a pay rise, hide a debt or borrow beyond what the lender considered affordable. They paid down only the amount that changed the assessment, used the 5% Deposit Scheme to avoid LMI and kept the rest of their savings for the purchase.

That gave them enough room to buy around $1 million. More importantly, they could buy a home that suited their plans rather than compromise because most lenders treated their HELP debt the same way.

At Hunter Galloway, we specialise in home loans for accountants and compare more than 30 banks and lenders. Based in Brisbane, we help accountants across Australia. For standard residential home loans, there are no fees for our service. We are usually paid by the lender if the loan settles, and that payment is disclosed in writing.

Compare your accountant home loan options before you apply.

Names and identifying details have been changed, and figures rounded. This is general information only and does not consider your objectives, financial situation or needs. Lending and scheme criteria can change.