The recently introduced Stage 3 tax cuts are set to increase the borrowing capacity of many Australians, especially those earning between $45,001 and $200,000 per year.

The exact increase will depend on individual circumstances such as income, existing debts and lender policies.

However, we can provide some estimates based on current data:


Annual income           Estimated increase in borrowing capacity

$90,000                            $15,000 – $25,000

$120,000                          $25,000 – $35,000

$150,000                          $30,000 – $45,000

It’s important to note that these are just estimates. The actual increase in your borrowing capacity could be higher or lower depending on your individual financial situation and the lender’s assessment.

Factors affecting borrowing capacity
Several factors influence how much your borrowing capacity could increase with the tax cuts:

  • Income
    The higher your income, the more your borrowing capacity is likely to increase.
  • Debt to income ratio (DTI)
    Your DTI is the percentage of your income that goes towards debt repayments. A lower DTI generally translates to a higher borrowing capacity.
  • Credit score
    A good credit score demonstrates your ability to manage debt responsibly and can increase your borrowing capacity.
  • Interest rates
    The prevailing interest rates also play a role. If rates are lower, you may be able to borrow more.

To take full advantage of the tax cuts and potentially increase your borrowing capacity, consider the following strategies:

  • Review your finances
    Assess your current financial situation including your income, expenses and debts.
  • Reduce debt
    Paying down existing debts, such as credit cards or personal loans, can improve your DTI and increase your borrowing power.
  • Maintain a good credit score
    Make sure your credit report is accurate and up to date and pay your bills on time.
  • Seek professional advice
    Consult with a mortgage broker to discuss your options and organise a personalised assessment of your borrowing capacity.
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If you’re considering buying a home or refinancing your existing mortgage, now is a great time to explore your options. The stage 3 tax cuts could significantly boost your borrowing power and make your dream home more attainable.

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