First Permanent has launched a new mortgage product designed to ease the affordability crisis for selected new graduates who have become professionally recognised, higher income earners.
The Graduate Home Loan PLUS allows graduates from selected professions to incorporate their HECS, HELP or FEE-HELP debt into their mortgage along with the purchase price of the property and any costs included.
This will make it easier for established graduates (three or more years in the workforce) to borrow funds to buy a home by eliminating the study debts which often place a firm barrier on their capacity to borrow.
"It provides a unique solution for home buyers 'locked out' of the property market by reason of their high HECS debt repayments and rental payments and who simply have not yet had time to save for a deposit and associated costs," explained Ian Grant, managing director and CEO, First Permanent.
The company said the opportunity to repay a HECS debt off earlier can hold huge financial benefits for recent graduates looking to enter the property market.
"By repaying the HECS debt early, the Federal Government discounts the HECS debt by a full 10%. This leads to a higher after-tax income which provides the borrower with greater borrowing capacity," said Grant.
The new home loan does not require any deposit, genuine savings, third party guarantee, family pledge or additional security of any kind. The product is only available to the applicants that have graduated in one of the following degree courses; accountancy, finance, engineering, law, medicine (MB BS), dentistry, pharmacy, veterinary science, podiatry and psychology (must be a registered psychologist).
Borrowers must have an established early career path and earn in excess of $65,000 per annum. A recent Genworth Financial study that says approximately 62% of new graduates that do not live in their own property have a HECS debt.