From this month, buying a home could be easier. Here’s why
July 1's tax cuts means a boost to your home loan application and could help you buy a home sooner.
The stage 3 tax cuts will put more money in your pocket each pay – you can see precisely how much here, but it ranges from a few hundred dollars to several thousand dollars a year.
That's money that banks and lenders will factor into your home loan application, confirms Sebastian Watkins, chief operating officer at national mortgage broker Aussie.
"These tax cuts mean there's a cohort of purchasers who… will increase their borrowing capacity, as their net income will grow and they will have more option[s] when seeking finance for a home," Watkins says.
"The additional income can be funnelled straight into extra savings for your deposit," he adds.
"Ultimately the healthier your deposit the less you need to borrow, so this is really a win-win situation for those ready to enter the market."
Exactly how much is your borrowing power going to jump?
Aussie have crunched the numbers, and it looks something like this:
| Borrowing power - existing 2023/24 tax rates | Borrowing power - new 2024/25 tax rates | Difference | |
|---|---|---|---|
| $70,000 | $360,600 | $375,100 | $14,500 |
| $80,000 | $393,600 | $410,500 | $16,900 |
| $90,000 | $459,700 | $479,250 | $19,550 |
| $100,000 | $526,000 | $548,000 | $22,000 |
| $120,000 | $615,100 | $642,200 | $27,100 |
| $140,000 | $702,300 | $740,000 | $37,700 |
Source: Single borrower, no dependants, based on a variable rate home loan with an interest rate of 6.28%; Aussie, June 2024.
This is the story for a single borrower. But what if you're buying in partnership?
According to Aussie, a married couple with two dependents earning a combined taxable income of $280,000, will increase their borrowing capacity by around $75k (on a mortgage with a 6.28% interest rate).
Finder research shows that almost half of all Aussies (46%) are expecting a tax return this July, which is another boost to the coffers.
When you put it all together – a juicy tax refund, more money in your bank account each month, and a boost to your borrowing power – your prospects of getting into your own home could be on improving.
Keen to explore your options? Learn more about grants and schemes for first home buyers worth $50K-plus