Before buying a home on the Gold Coast, Kirstie McConnell, 26, went through several mortgage brokers.
She was finally able to secure a deal on a $365,000 property in March.
It was a proud moment for the young woman, who had been avoiding the housing market for several years due to fear.
However, her excitement soon turned to worry as she started to struggle with her finances.
She had all the necessary skills to succeed in the housing market. After graduating from university, working hard, and saving enough for a down payment on a modest home, she exceeded the First Home Guarantee’s 5 percent deposit requirement.
After going through several brokers, she eventually settled on a single agent who she believed was reputable. According to 7NEWS.com, the individual she chose was an employee of a major company. As a first-time home buyer, McConnell was eager to learn more about the process and her $60,000 Higher Education Contribution Scheme (HECS) debt.
The agent suggested that she sign the contract without asking for an unconditional approval, which she accepted based on the numerous reasons given by the broker. However, he neglected to consider her HECS debt.
Although she was trusting the agent, McConnell noted that it was their responsibility to tell her what was happening. After she was able to secure a contract, her deposit amount ballooned. She was left with little time to secure the necessary funds.
The balance on her deposit was almost $20,000 higher than the original estimate. It also exceeded her bank’s deposit by $4000.
Even though she had a $10,000 savings cushion, she was already in deficit. McConnell had only a window to withdraw, and she was worried that she might not be able to get another opportunity. She repeatedly asked the agent if there was anything else that could affect her, and she was eventually reassured that she would not be charged any more.
A month passed, and she still had no window to withdraw without incurring financial penalties. Then, last week, she received another bill with an additional $2,000 in fees. She was exasperated by the lack of communication and asked how many times she had been told that this would not happen.
Since she was 22 years old, McConnell has been saving for her education, and she works full-time at a digital marketing company. She noted that many young people are forced to attend university due to the high cost of education. She said that the decision to pursue higher education just feels like it’s coming back to bite them.
According to her, high achievers are assured that attending university is the only choice for them, and there are no negatives associated with it. She noted that the high cost of education is always talked about as if it’s a good deal. However, with a HECS debt, a person’s monthly income can be reduced by the amount they owe.
For McConnell’s $80,000 salary, her HECS payment rate is set at 5 percent. Based on a $60,000 debt, this means that she would have to pay around $250 a month in principal and interest on her loan. According to the website of UNO Home Loans, a person with a similar income and a similar deposit could reduce their loan’s capacity by up to $36,000 due to the university debt.
According to experts, people can either pay the debt off completely, get a raise, or increase their deposit. McConnell believes that this would have resulted in her being billed more than the original estimate, as her debts were checked against the broker’s calculations.