The new financial year brings with it the implementation of the stage three tax cuts, offering a potential silver lining for Australians navigating the rising cost of living and a competitive property market. Lendi, has analysed the potential impact of these tax cuts on borrowing power, revealing exciting possibilities for both new purchase and refinance customers.  

But how can you make the most of these tax cuts to achieve your goals? Lendi Home Loan Consultant, Chris Moore, shares valuable insights to help you navigate this financial landscape, the smart way. 

&nbsp;
## Tax cuts explained: more money for you (and millions of others)  

Imagine getting a raise? That's kind of what the tax cuts are like. The stage three tax cuts came into effect on 1 July 2024 and will impact approximately 13.6 million Australians. The key changes include: 

- __Lower Tax Rate:__ The tax bracket for people earning between $37,000 and $120,000 is dropping from 32.5% to 30%. This means you'll keep more of your hard-earned money. 
- __Higher Thresholds:__ The point at which your income starts getting taxed at a higher rate is also increasing. For example, the threshold for the 37% tax bracket is going up from $120,000 to $135,000. This means you'll pay less tax overall if you fall within this income range. 
- __Tax Relief for Low Earners:__ The lowest tax bracket (for those earning between $18,000 and $45,000) is also seeing a decrease, dropping from 19% to 16%. This provides some much-needed tax relief for low-income earners.

| Income    | Tax rate  |
| ---------- | ---------- |
| Up to $18,200|0%|
| $18,201 – $45,000| 16%       |
| $45,001 – $120,000        | 30%       |
| $120,001 – $180,000        | 37%       |
| Over $180,000        | 45%      |

%%How much has your borrowing power increased?%%

&nbsp;
## How much more could you borrow? 

Lendi, crunched the numbers to see how these tax cuts could affect your [borrowing power](https://www.lendi.com.au/home-loans/basics/borrowing-power/applicants/ "Borrowing Power calculator").  

Here are some examples^: 
- __Single Australian earns more, borrows more:__ Let's say you're a single Australian making $120,000 a year. Thanks to the tax cuts, you could potentially borrow an extra $27,000 for your mortgage. That's a bigger house, a better location, or simply more breathing room in your budget. 
- __Power couple sees bigger borrowing potential:__ Imagine a married couple with two dependents making a combined taxable income of $280,000. The tax cuts could translate to a whopping $75,345.89 increase in their borrowing capacity. That's a significant jump that could open doors to their dream home. 

| Joint application, both applicants earning    | Borrowing has increased by*  |
| ---------- | ---------- |
| $70,000       | $28,873.31       |
| $80,000      | $33,924.73       |
| $90,000       | $38,976.16       |
| $100,000      | $44,027.58       |
| $120,000      | $54,123.85       |
| $140,000      | $75,345.89       |

*Based on ABS Lending Indicators for families at an average interest rate of 6.28%

%%Ready to make the most of your tax cut?%%

"We've been hearing from many potential purchasers who are struggling to reach the amount they need to buy their dream home," says Lendi Co-Founder & Chief Operating Officer Sebastian Watkins.  

"The tax cuts will provide them with more financial leeway, increasing their options and making homeownership a more achievable goal." 

&nbsp;
## How to take advantage of the tax cuts: Expert tips from Chris Moore

Chris Moore, a trusted Lendi Home Loan Consultant, understands the challenges borrowers face. He's breaking down the stage three tax cuts and providing practical tips to help you navigate the home loan process with confidence.

![Lendi Home Loan Specialist, Chris Moore](//images.ctfassets.net/o2gysnvd04sg/1WFCdWOUukutiFo3lDLiHg/167c7cbcfbaf21e176c0fc7643f85cdc/Chris_Moore.jpg)

&nbsp;
## Understanding the impact: tax cuts for existing and potential borrowers

"The tax cuts ultimately translate to more net income in your pocket," explains Moore. This applies to both existing borrowers and potential buyers, albeit with slight variations. This extra income can be a significant benefit, especially considering the rising cost of living. 

__Potential borrowers: __
- In a competitive property market like the current one, the increased borrowing capacity due to the tax cuts could be a game-changer.
- Even a small increase of $10,000 or $20,000 in your offer could be the difference between securing your dream home or missing out. 

%%Planning to buy a home?%%

__Existing borrowers: The additional income from tax cuts provides flexibility. __
- You can use it to make additional repayments towards your loan principal, thereby reducing the overall loan term and saving on interest.
- Alternatively, you can channel it into an offset account, effectively lowering your loan balance and reducing interest charges.
- Build up an emergency fund.

%%Could you borrow more money?%% 

Moore advises caution against simply increasing your borrowing capacity without considering future interest rate rises. He emphasises the importance of maintaining a holistic approach and ensuring your repayments remain comfortable within your original budget. 

&nbsp;
## 5 smart ways to maximise your tax cuts 
Want to make the most of your extra cash? Here are five practical steps to help you boost your financial well-being: 

1. __Increase your borrowing power (responsibly):__  For potential buyers, the tax cuts can improve your borrowing capacity. But don't stretch yourself too thin and ensure your potential repayments remain comfortable within your budget. 
2. __Review and revamp your budget:__ The new financial year is a perfect time to [assess your finances](https://www.lendi.com.au/inspire/finance/how-to-spring-clean-finances/ "How to spring clean your finances"). Look for areas where you can cut back and free up additional funds to put towards your homeownership goals. 
3. __Smart use of your offset account:__ Consider channelling your tax benefit into your [offset account](https://www.lendi.com.au/calculators/offset-calculator/ "Lendi Offset Calculator"). This effectively reduces your loan balance, lowering your interest repayments over the loan term.
4. __Prioritise high-interest debts:__ Focus on eliminating high-interest debts like credit cards or short-term loans. Freeing up this income will improve your overall financial health and make you a more attractive borrower. 
5. __Build an emergency buffer:__ With the rising cost of living and potential for interest rate hikes, having a financial safety net is crucial. Aim to build an emergency fund that can cover several months of expenses.  

%%Feel good about your home loan choices%%

&nbsp;

__About our Lendi Home Loan Consultant, Chris Moore__ 

Chris Moore is a high-achieving Home Loan Consultant at Lendi, based in Perth. With a strong foundation in accounting, Chris brings a unique perspective and deep financial acumen to the mortgage broking industry. His passion for helping clients navigate the complex world of home loans led him to join Lendi, where he has quickly risen through the ranks to become a top performer. Recognised for his exceptional skills and contributions to the industry, Chris has received multiple awards including being named a 2024 Rising Star by Mortgage Professionals Australia and a finalist in the MFAA Excellence Awards' Newcomer category. These accolades, alongside his induction into Lendi's Signature Program for top performers, solidify his position as a rising star in the mortgage broking sector. 

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

*^Lendi Group Data*

How much has your borrowing power increased?

Chat to us today about your home loan options. 

See if you could boost your borrowing power by chatting to us.

Ready to make the most of your tax cut?

Know your budget and calculate your borrowing power today.

Planning to buy a home?

Chat to Lendi and unlock greater options with the tax cuts. 

Could you borrow more money?

Chat to our Lendi experts about your next move.

Feel good about your home loan choices

Tell us what you are looking for and see if you can save. 

Check today's competitive home loan rates

How the tax cuts could boost your borrowing power 

On May 3, 2022, the Reserve Bank of Australia (RBA) made its first increase since November 2010. Since then, the RBA has made several rate adjustments, impacting borrowers across the country. 

In this article, we explore the latest updates on the RBA rate hikes and how Australian banks have responded.

&nbsp;
## What are the interest rate movements in 2024?

So far in 2024, there have been no cash rate movements. 

%%How much can you save by refinancing?%%

&nbsp;
## How do you stay informed and prepared for rate changes?

While the RBA sets the cash rate, individual banks determine the specific interest rates on home loans. Therefore, banks' rates may not directly correlate with the RBA's rate adjustments. 

To help borrowers [stay informed about interest rate changes](https://www.lendi.com.au/inspire/finance/how-to-prepare-for-an-interest-rate-increase/), we have compiled a list below of banks that have increased their interest rates in response to the RBA rate hikes in 2022 and 2023. 

&nbsp;
## Annual interest rate increases 2023

Here we've compiled all the rate movements and rate holds across 2023.

A reminder: The RBA didn’t meet in January, so we didn’t see a cash rate hike that month. 

| Lender     | Jan     | Feb     | Mar     | Apr     | May     | Jun     | Jul     | Aug     | Sep     | Oct     | Nov     | Dec     |
| ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
| Adelaide Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       | N/A       |
| AMP Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| ANZ       | N/A       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | 0.25% | N/A       |        
| Athena Home Loans       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Australian Military Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Auswide Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bank Australia       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bank First       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | Unknown       | N/A       |
| Bank of Melbourne       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bank of Queensland       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bank of Sydney       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| BankSA       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | N/A       |
| Bankwest       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bendigo Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Beyond Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Bluestone       | N/A       | 0.25%-0.29%       | 0.25%-0.29%       | N/A       | 0.25%-0.40%       | 0.25%-0.30%       | N/A       | N/A       | N/A       | N/A       | 0.25%-0.35%       | N/A       |
| Citi       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Commonwealth Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Firstmac       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Great Southern Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| HSBC       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | Unknown       | N/A       |
| ING       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Macquarie Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| ME Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| MyState Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| NAB       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Newcastle Permanent       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| RACQ Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| RAMS       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Resimac       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | Unknown       | N/A       |
| St. George Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Suncorp Bank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| UBank       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Virgin Money       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |
| Westpac       | N/A       | 0.25%       | 0.25%       | N/A       | 0.25%       | 0.25%       | N/A       | N/A       | N/A       | N/A       | 0.25%       | N/A       |

__Note: This table highlights the lenders’ announced changes to their variable rate home loans. However, your own interest rate will depend on your specific home loan product.__

&nbsp;
## Annual interest rate increases 2022 

Annual interest rate increases for existing customers.

| Lender     | May     | Jun     | Jul     | Aug     | Sep     | Oct     | Nov     | Dec     |
| ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
| Adelaide Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| AMP Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| ANZ       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Athena Home Loans       | 0.25%       | 0.50%       | 0.65%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Australian Military Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Auswide Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bank Australia       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bank First       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bank of Melbourne       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bank of Queensland       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bank of Sydney       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| BankSA       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bankwest       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bendigo Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Beyond Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Bluestone       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.30%       | 0.25%       | 0.25%       |
| Citi       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Commonwealth Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Firstmac       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.60%       | 0.25%       | 0.25%       | 0.25%       |
| Great Southern Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| HSBC       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| ING       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Macquarie Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| ME Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| MyState Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | Cell       | Cell       |
| NAB       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Newcastle Permanent       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| RACQ Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.15%       | 0.25%       | 0.25%       |
| RAMS       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Resimac       | 0.25%       | 0.75%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| St. George Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Suncorp Bank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| UBank       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Virgin Money       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |
| Westpac       | 0.25%       | 0.50%       | 0.50%       | 0.50%       | 0.50%       | 0.25%       | 0.25%       | 0.25%       |

__Note: This table highlights the lenders’ announced changes to their variable rate home loans. However, your own interest rate will depend on your specific home loan product.__

If you’re not sure whether your home loan is still a good fit for you, consider speaking with a mortgage broker for free expert advice. 

&nbsp;
## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/)

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

Calculate your monthly home loan repayments

Find out if you can save with a lower interest rate. 

Find out what your new repayments might be in seconds.

How much can you save by refinancing?

Don't be caught off guard: the latest bank rate hikes you need to know 

If you are looking to purchase your first home but are struggling to save up enough money for a [deposit](https://www.lendi.com.au/home-loans/deposit/), you might want to check out the Australian Government’s First home super saver (FHSS) scheme.

%%___widget home-loan-repayment%%

- __Related__: Read our free E-book [how to buy a home in 9 easy steps](//assets.ctfassets.net/o2gysnvd04sg/7s4kN1VPS3BcL7O7LryJDt/4830fd27d3307eb0c278ad8545fdd0e7/how-to-buy-a-house.pdf)

## What is the First Home Buyer Super Save Scheme?

The First Home Super Saver Scheme (FHSSS) was introduced in July 2017 by the Australian Government and the Australian Taxation Office as a way to improve housing affordability and help first home buyers get into Australia’s expensive property market.

The scheme allows borrowers to save money and grow their home deposit using their superannuation fund. Borrowers will benefit from a lower rate of tax charged on their superannuation account.

%%Check today's competitive home loan rates%%

## How does the First Home Buyer Super Save Scheme work?

The FHSS scheme requires you to make voluntary contributions into your super fund account. This is done by either making manual personal contributions or you may be able to enter into a salary sacrifice arrangement with your employer.

It’s important to note that not all employers provide these arrangements, so you may have to make the contributions yourself or opt for another saving method.

The main benefit to the FHSS scheme is the tax saving that can be made, as super contributions are charged at a lower tax rate than most income levels.

- You can save up to $15,000 of voluntary contributions within one financial year to be released under the FHSS scheme, or up to $50,000 in contributions over the course of the scheme.
- Before signing your first home contract or applying to release your FHSS funds, you have to apply and receive your FHSS determination from the Australian Tax Office (ATO). After you’ve made a valid release request you have 12 months to either sign a contract to purchase/construct a home or recontribute the FHSS amount into your super.
- If you sign a contract you must notify the ATO within 28 days of signing it. If you recontribute your FHSS amount you must inform the ATO within 12 months of requesting the release.

__Related__: Our complete guide to the [First Home Owner Grant](https://www.lendi.com.au/home-loans/first-home-owner-grant/)

## Who is eligible for the FHSS scheme?

![couple-in-first-home](//images.ctfassets.net/o2gysnvd04sg/21TJJNl0MokD3ArERPGRse/99f20b8aac6ae9f5febd6f685e863a25/couple-in-first-home.jpg)

The main eligibility requirement to partake in the First Home Super Saver Scheme is to have never owned property in Australia. You must also be at least 18 years old.

In some cases of severe financial hardship, the ATO may consider granting those who have previously owned property access to the scheme. To be eligible for this, you should have lost all property because of events such as:

- Severe illness
- Bankruptcy
- Loss of employment
- Relationship breakdown (e.g. divorce)
- Natural disaster that affected property interests

%%Wondering how much you could borrow?%%

## What are the benefits of the FHSS Scheme?
The benefits of the First Home Super Saver Scheme include:

- Makes it easier to access the property market and focus on saving.
- You can save on tax which can help you save up for a deposit more quickly. Concessional super contributions are only taxed at 15% whereas your marginal tax rate (income tax) can be up to 45%.
- As of July 2019, you don’t have to wait until your FHSS amounts are released before signing a contract to purchase your property.

%%Will you need to pay LMI?%%

## Are there any restrictions or conditions to be aware of?

There are a number of First Home Super Saver Scheme restrictions you should be aware of:

- The home you wish to purchase must be located in Australia, as of July 2019.
- Some superannuation funds will not release the money and could charge additional fees. It’s best to ask about this before entering into a salary sacrifice arrangement or making voluntary contributions.
- When you receive your FHSS funds, you will receive a payment summary that will affect your tax for that financial year.
- You must intend to live on the property as soon as possible after purchase. Or, you should live there for at least 6 out of the first 12 months of owning the property.
- The FHSS scheme is a one-time only deal and you can only make a single withdrawal.
- You can not use the funds on certain types of property: a houseboat, motor home, premises incapable of being used as a residence and vacant land. The FHSS scheme can be used to purchase vacant land if the contract to begin construction on a home is made within 12 months of the release request.

If eligible, you can benefit greatly by using the FHSS scheme. Find out more by speaking to one of our Home Loan Specialists today.

%%Have you checked interest rates lately?%%

## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/). 

*The information in this post is general in nature and should not be considered personal or financial advice. 
You should always seek professional advice or assistance before making any financial decisions.*

%%Got your eye on a property down the street?%%

Got your eye on a property down the street?

Find out how much it's worth with our free property report.

Calculate your borrowing power based on your income.

Wondering how much you could borrow?

We search over 25 major Australian lenders in seconds. 

Have you checked interest rates lately?

See how much you might need to pay if you're low on a deposit.

Will you need to pay LMI?

Home loans explained: The First Home Super Saver Scheme

We spoke to Dimitri Maroungas about driving innovation in lending and insights from his journey as a Senior Product Manager at Lendi Group.

- __Related:__ [Life at Lendi: Nico talks innovation and accessibility as a Senior Product Designer](https://www.lendi.com.au/inspire/life-at-lendi/life-at-lendi-nico-mele/)
- __Related:__ [Life at Lendi: Rebecca takes us through a day in the life of an IT Operations Coordinator](https://www.lendi.com.au/inspire/life-at-lendi/life-at-lendi-rebecca-drummond/)
- __Related:__ [Life at Lendi: Le talks lifestyle management and encouraging healthy BA practices](https://www.lendi.com.au/inspire/life-at-lendi/life-at-lendi-le-cockinos/)

&nbsp;
## You’ve achieved so much since you started here, can you start by telling us a bit of your background?

My first full-time role post-university was at Westpac in February 2017, where I joined the 'Digital' stream of the graduate program while completing my Advertising and Public Relations degree at UNSW. I spent four years working on mobile apps and digital banking. 

In 2021, I joined the ‘challenger’ bank 86 400, working on key initiatives during its merger with NAB's digital arm, UBank. Towards the end of the merger, I learned about an exciting opportunity at Lendi Group in the mobile app space, and here I am.

&nbsp;
## What were the main objectives or goals you aimed to achieve with the app's creation?

Right from the beginning, we knew we weren’t interested in rebuilding a home loan application journey in our app. Instead, we decided there was real value in an app that seeks to give every Australian confidence on the value of their property. 

By combining automated valuations and a user’s current home loan details, the app helps our users understand not only the total value of what is likely their most valuable asset, but also any equity they’ve built up since they bought. 

Unlocking that equity is made easy through the help of your local Aussie Broker, and the app’s the easiest place to connect with them to book an appointment.

&nbsp;
## Looking ahead, what excites you most about the future of our mobile app, and what developments can our audience look forward to?

We’ve got big plans for the Aussie app, and what we’ve launched with is only the beginning. We've just released an update that lets our users access their credit score securely and easily via the app, for starters. 

We’re also actively working to bring our users richer insights and data on their home and their local neighbourhood - insights they can use to make informed decisions about their next financial move. 

One of the best parts of the app is the way it seamlessly connects our users with their local Aussie Broker, and as a result we’re also exploring the different ways the app can be used to prepare for an upcoming scheduled appointment with an Aussie Broker, for the best use of everyone’s time.

&nbsp;
## How did you ensure that the app aligned with both our company's vision and the needs of our users?

Early on during the discovery phase for the app, we held numerous workshops with attendees from all parts of the business - leadership, technology, distribution, and of course, as many Aussie Brokers as possible. In those sessions we primarily sought inputs on opportunities and rationalised them all against our organisational goals.

## Lendi is hiring!

We're always on the lookout for passionate, motivated individuals who are excited about innovation and ongoing learning. If you're looking for a new opportunity, check out our [open roles and company page](https://careers.smartrecruiters.com/LendiGroup1) to find out more.

Life at Lendi: Insights from Dimitri's journey as a Senior Product Manager

Despite the past 12 months being a tough slog for first home buyers, 3 in every 10 new purchases were young Australians according to new Lendi data.

Lendi Group consumer sentiment survey conducted in the lead up to the May’s RBA decision reveals 25% or 1 in every 4 mortgage holders are waiting on RBA monetary decisions before they decide to refinance. 

Undertaken during April with over 1,000 homeowners who had lived through all 13 RBA interest rate rises since May 2022, a quarter admitted refinancing and revisiting their mortgage was aligned with RBA decisions and ‘on hold’. 

&nbsp;
## Should you wait before refinancing? 

As the [Reserve Bank of Australia (RBA)](https://www.lendi.com.au/inspire/finance/how-does-rba-cash-rate-affect-home-loan-repayments/) continues to deliberate on interest rates, Lendi Group CEO David Hyman has urged homeowners across the nation “not to time the market and wait for RBA movements before taking action on their home loan.” 

“Waiting for RBA decisions to consider home loan adjustments can lead to missed opportunities and unnecessary financial strain.” 

"While an important factor, major RBA monetary decisions shouldn't be the only factor driving your financial decisions right now, particularly when it comes to the largest debt many will face in their lifetime,” says David Hyman, Co-Founder & CEO of Lendi Group who also owns Aussie. 

%%How much can you save by refinancing?%%

&nbsp;
## What are the benefits of checking in with your mortgage broker? 

According to Mr Hyman, "Consumers have the power to [review their current loan arrangements](https://www.lendi.com.au/book-appointment/), [negotiate with their lender](https://www.lendi.com.au/inspire/finance/how-to-negotiate-a-lower-interest-rate-on-your-home-loan/), [explore available options](https://www.lendi.com.au/home-loans/basics/refinance/loan-amount), and potentially secure more favourable terms; and that’s where a broker can step in.” 

“Assessing your existing loan terms can uncover opportunities for refinancing or renegotiation, potentially leading to lower interest rates, lower repayments, reduced fees and better access to the right home loan product for your situation.” 

%%Want to reduce your monthly payments?%%

&nbsp;
## How much could you save on your home loan by finding a better deal? 

ABS most recent Lending Indicators revealed that nationally, the average interest rate for mortgage holders is currently 6.8%, with an average mortgage size of $624,000. 

However, many lenders – including some who lowered rates just last month – are offering rates from 5.99 to 6.4%, allowing brokers to step in and help customers potentially claw back the last two rate rises.   

“Based on these numbers, an average homeowner with a $624,000 loan who refinanced right now, could save around $300 every month,” says Mr Hyman. 

You might be able to save on your home loan sooner than you think. [Check in with a Lendi Home Loan Specialist](https://www.lendi.com.au/book-appointment/) to find out what deals you could be eligible for. 

&nbsp;
## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/).

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

Compare competitive refinance rates with Lendi.

Want to reduce your monthly payments?

Lendi Group CEO cautions homeowners: don’t wait for the market to move 

Buying a property is a significant financial decision, one that requires careful consideration and thorough due diligence.  

One crucial aspect of purchasing a property is reviewing and understanding the contract of sale.  

In this article, we’ll discuss the importance of getting a contract of sale review before buying a property, what a contract for sale of property entails, why it matters, what steps you should take and how Lendi can help you in this process. 

&nbsp;
## What is a contract of sale? 

A contract of sale is a legally binding purchase agreement that outlines the terms and conditions for the purchase or sale of a property.  

It includes essential information such as the: 

- Names of the seller and buyer 
- Property details 
- Purchase price 
- [Deposit amount](https://www.lendi.com.au/home-loans/deposit/) 
- [Settlement date](https://www.lendi.com.au/inspire/insights/home-settlement-process/) 
- Any special conditions.  

The contract of sale is prepared by the seller's agent or solicitor and is subject to negotiation, ensuring both parties are satisfied with the terms before signing. 

&nbsp;
## Why are contract reviews important when buying property? 

Reviewing the contract of sale is crucial because it safeguards your interests and ensures you’re fully aware of all the terms and conditions that come with the transaction. Ergo, no nasty or costly surprises associated with your home purchase down the track. 

Without a thorough review, you could be exposed to potential risks or unfavourable clauses that can affect your financial well-being or future plans.  

By carefully reviewing the contract, you can: 

- Identify any issues 
- Negotiate changes if needed 
- Protect yourself from unexpected complications or disputes. 

Sound overwhelming? You don’t have to do it alone. In fact, it’s highly recommended to call on services from a conveyancer or solicitor to make sure you’re dotting your i's and crossing your t’s. 

Lendi’s Buying Buddy service entitles you to three free contract reviews with our own conveyancer provider^, so you can save the extra cash and put it towards your home purchase. 

%%Get your contract reviewed%%

&nbsp;
## How much do contract reviews typically cost? 

One contract review could [cost you as much as $550 on average](https://settleeasy.com.au/free-contract-review-propertyau/). 

Keep in mind that the cost can vary depending on the specific requirements, legal regulations, and the complexity of the contract. 

&nbsp;
## What is a conveyancer and solicitor? 

[Conveyancers](https://www.lendi.com.au/inspire/property/how-conveyancing-works-and-how-much-it-costs/) manage the legal aspects of property transfers and ensure a smooth exchange for clients.  

While solicitors can also handle conveyancing, conveyancers are specialised in this area. Both conveyancers and solicitors are qualified to handle property transactions and hold recognised certifications. 

There are a few key differences between the two:

| Conveyancer     | Solicitor     |
| ---------- | ---------- |
| Conveyancers in Australia go through a rigorous process of two years of study and two years of supervised practical experience before they can apply for a conveyancing license. Once licensed, they are registered with the Australian Institute of Conveyancers. Please note that the specific requirements may vary from state to state.        | Solicitors in Australia acquire their conveyancing knowledge through their Law degree, where they study conveyancing as part of their curriculum. They also have the option to delve into the subject further as an elective. Once qualified as practicing solicitors, they are qualified to handle property conveyancing.       |
| Not able to provide legal advice during the home purchase process.       | Able to provide legal advice during the home purchase process.        |
| Typically costs less than a solicitor.        | Typically costs more to than a conveyancer.       |

&nbsp;
## What steps can you take when you get your contract?  

- __Get professional assistance:__ Engaging a conveyancer, solicitor, or legal professional experienced in property transactions is highly recommended. They have the expertise to review the contract, explain legal jargon, identify unfavourable clauses and advise you on necessary modifications or negotiation tactics. 

- __Thoroughly read and understand the contract:__ Take the time to read the contract of sale thoroughly. Pay attention to details such as property boundaries, fixtures and fittings, easements and any special conditions. Seek professional clarification for anything you find confusing or unclear. 

- __Consider finance and building inspections:__ It's essential to include clauses in the contract that provide adequate time for finance and [building inspections](https://www.lendi.com.au/inspire/property/guide-to-building-pest-strata-inspections/). These inspections help ensure the property meets your expectations and financial feasibility. 

- __Negotiate favourable terms:__ With the help of a legal professional, negotiate any necessary changes or additions to the contract of sale. This may include modifying settlement dates, deposit amounts, or requesting repairs or adjustments based on inspection reports. 

%%Get peace of mind before you sign%%

&nbsp;
## Do you lose your deposit if you pull out of a house sale? 

Yes, it is possible to lose your deposit if you pull out of a house sale, depending on your circumstances and the terms outlined in the contract. 

If you have a valid reason for backing out of the sale, you may be able to get your deposit back. However, if you simply change your mind without a valid reason, you could risk losing the money you put down. 

&nbsp;
## How long is a contract of sale valid for? 

The validity period of a contract of sale can vary and is typically specified within the terms and conditions of the contract itself. 

&nbsp;
## What is an unconditional contract of sale? 

An unconditional contract of sale is an agreement between a buyer and seller for the purchase of a property or asset without any conditions or contingencies attached.  

Once the contract is signed and exchanged, both parties are legally obligated to complete the transaction. 

&nbsp;
## How can Lendi help? 

At Lendi, we’re here to help you throughout the home buying process, including the contract review stage. 

Our Buying Buddy experience offers tailored help specific to your needs. In partnership with Settle Easy, you can take advantage of 3 free contract reviews to get the ball rolling on your home buying journey.  

Getting a contract review before purchasing a property is crucial to safeguard your interests, mitigate risks, and ensure a smooth transaction.

By understanding the contract of sale with help from an expert, you can navigate the complex property buying process with confidence and peace of mind. [Get in touch to learn more](https://www.lendi.com.au/book-appointment/). 

&nbsp;
## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/)

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

__Disclaimer__

^Settle Easy provides up to three (3) free contract reviews of residential contracts of sale, in total valued at $990. This is only available in participating states and territories and is subject to any terms imposed by Settle Easy. Please consult the Service and Fee Schedule available on the Settle Easy website for a comprehensive overview of the services offered, associated fees, and any potential additional charges. Disbursement figures are provided as estimates and may vary depending on the nature and location of the property. 

To redeem this offer, simply book an appointment with Lendi.

Get your contract reviewed

Get 3 free contract reviews with our conveyancing partners.

Get peace of mind before you sign

Why it’s important to get a contract review before you buy

Despite the past 12 months being a tough slog for first home buyers, 3 in every 10 new purchases were young Australians according to new Lendi data.

Rather than being deterred from the property market, these buyers are beating the odds by finding ways to buy outside of traditional avenues. 

Wondering for yourself how to get into the property market? In this article, we’ll take a look at the 4 different ways to buy a home that many buyers are using to jump on the property ladder for the very first time.  

&nbsp;
## 1. Rentvesting 

Lendi’s data reveals 20% of first home buyers were rentvesters in 2023. 

Did you know? The [rentvesting strategy](https://www.lendi.com.au/home-loans/rentvesting-investing-while-renting/) involves renting a property to live in while simultaneously investing in one or more other properties. This allows individuals to enter the property market and build a property portfolio while still enjoying the flexibility and lifestyle benefits of renting. 

The most popular states for young first home buyers who chose to rentvest in 2023 included: 

- NSW at 30% 
- QLD at 26% 
- VIC at 20% 
- WA at 10% 
- SA at 7%. 

Kim Horan, Aussie Broker at St. Marys says, “Lots of young purchasers are looking long term with a desire to get into the property market early, but wanting to maintain the lifestyle they have.  

“Many are buying homes in areas they can afford and renting out the home while they either stay at home with parents or rent in areas that suit their current lifestyle.” 

%%Want free expert help with your home loan?%%

&nbsp;
## 2. Buying with mates 

Latest Lendi data has seen 6% of first home buyers purchase outside the traditional single or dual occupancy, a 4% jump from 2022. 

With the criteria for the [First Home Buyer Guarantee](https://www.lendi.com.au/inspire/finance/a-guide-to-the-government-home-guarantee-schemes/) expanding, more people are buying a house with friends. 

Sebastian Watkins Cofounder & COO of Lendi said “It’s interesting to see more purchasers venturing out and seeking loans with three or more applicants to lessen the load on the individual. 

“It is not common knowledge that you can have up to four people on a home loan meaning that buying with friends and family is absolutely an option for consideration and something that brokers are helping with.” 

Brokers can assist in working through the setup, including finding the right solicitor or conveyancer with experience in co-ownership agreements. 

&nbsp;
## 3. Gaining a guarantor 

With much of the nation’s wealth held up in real estate, [guarantor loans](https://www.lendi.com.au/home-loans/guarantor/) more than doubled in 2023, compared to the year prior from 1.8% to 5%. 

“Purchasers who were able to leverage equity provided by guarantors, often from parents or guardians via guarantor loans, were able to enter the market with a deposit, on average, of $38,000. "For the remainder of First Home Buyers, they had to fork out over double that, with an average deposit of $103,000,” said Mr Watkins. 

“It’s a more readily available option for most parents that requires very little besides trust in their kid’s ability to pay the loan. Of course, it’s vital that they have that confidence, and a good broker can work through those numbers.” 

%%Could you be eligible for government help?%%

&nbsp;
## 4. Accessing first home buyer grants, super or tax schemes 

Following the Queensland Government’s [First Home Owner Grant](https://www.lendi.com.au/home-loans/first-home-owner-grant/) doubling to $30,000, Lendi has seen Queensland outperform the first home buyer new purchase market, reaching 45% of all new purchases during the first month of the 2024. 

Further, some buyers may also be able to access any [extra repayments](https://www.lendi.com.au/inspire/finance/pay-off-your-loan-faster-with-extra-repayments/) they have made to their superannuation through the [First Home Super Saver scheme](https://www.lendi.com.au/inspire/finance/first-home-buyer-super-saver-scheme/), which can help to top up their deposit.  

Brokers can help with the right knowledge for grants and tax schemes for your state or territory. 

Wondering what alternative pathways you could take to homeownership? [Speak to a Lendi Home Loan Specialist](https://www.lendi.com.au/book-appointment/) about your situation – you could buy a home sooner than you think. 

&nbsp;
## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/).

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

Could you be eligible for government help?

Find out how much you could save on your first home purchase.

Want free expert help with your home loan?

Book a chat with a Lendi Home Loan Specialist today. 

4 key trends seeing first home buyers get a foothold, right now 

Don't pay more than you need to.

Could you get a lower rate?

If you have a low credit score you may be struggling to get approved for a home loan or even a credit card. There are a few things you can do to help improve your credit rating in a short amount of time to give you the best chance of getting approved and securing the lowest interest rate possible. 

%%Check your credit score for free, in minutes%%

## Tips to improve your credit rating 

### 1. Check your credit report regularly

This will help you monitor your credit rating, and flag anything you believe has been incorrectly recorded. Most credit agencies will provide you with a free credit report each year. 

Pay close attention to:
- the spelling of your name

- current and former addresses

- current and former employers

- past credit applications or queries

- any missed credit payments

### 2. Correct any inaccuracies

If you spot an error on your credit report, speak to the relevant credit reporting agency as soon as you can to get this error corrected. Challenge any issues that you come across when checking your credit report, and always be aware of the possibility of identity theft corrupting your statements and score. 

You can request a correction on your credit file with [Equifax here](https://www.equifax.com.au/personal/resolution-centre). 

### 3. Pay your bills on time

It sounds obvious, yet many Australians still struggle or simply forget to pay their bills. Review your payment history and existing credit accounts. Try to set up automatic or direct debit payments from your account so you won't have to worry about forgetting. 

If you can, try to pay your bills early, which can demonstrate your reliability and responsibility to lenders over time. Keep in mind that if you do have a bad habit of overdue bills, this record can stay on your credit report for up to 5 years.

%%Calculate your monthly repayments%%

### 4. Avoid making too many credit enquiries 

Frequently making hard enquiries, that is, applying for credit is an adverse signal to lenders as it may suggest that you are in a position of financial difficulty. This, in turn, will be noted in your credit history and can subsequently lower your credit score.

Therefore, it's a good idea to avoid making too many applications in a short period of time. Instead, space out your applications and only apply when there is a high chance you'll be approved. Speaking to a [Home Loan Specialist](https://www.lendi.com.au/book-appointment/) before you apply. They can help find a loan option you are likely to get approved for. 

### 5. Consolidate debt 

This is the process of combining all your high interest debt obligations into one loan, which generally has a much lower interest rate in comparison e.g. incorporating your credit card or personal loan into your home loan. 

This can offer a significant saving in interest and means you won't need to juggle multiple repayments each month. Consolidating may give you a better chance of improving your credit score in the future.

### 6. Try not to switch jobs
For lenders, job stability = financial stability, and showing that you can keep a steady job speaks volumes. If you can, try to avoid job hopping and having gaps in your resume while you are attempting to mend your credit rating.  The more consistent your income is, the better, when it comes to raising your credit score.  

%%Afraid you're not getting the best home loan?%%

With this information, as well as with some hard work and patience,  you can now attempt to raise your credit score in just a few months. 

![man-in-dispute-on-phone](//images.ctfassets.net/o2gysnvd04sg/2kCoxRbGQwOAKWcCwkYmSA/61d9ec2429bc540f6c15a78678070534/man-in-dispute-on-phone.jpg)

## What is a credit score?

A credit score is a figure that determines your financial history. This number tells lenders how reliable you are and consequently, whether or not you're eligible for a home loan or credit card. A bad credit score could mean that you might face difficulties in securing a loan in the future, or be required to pay higher interest rates and monthly loan repayments despite securing one.

%%Wondering how much you could borrow?%%

## Why is my credit score so important?

Without a good credit score, the process of getting a home loan can be prolonged. While it's possible to start out with a bad credit score and gradually improve it, a good credit score from the get-go can really allow lenders to see you as a consistent individual when it comes to your finances.

This is why it's important to be aware and conscious of it early, as when the time comes to apply for a home loan, it may be too late. You might then, have to delay the process of obtaining a home loan. 

## How is my credit score calculated?

Your credit score is calculated using the information on your credit report, which can include the following:

- __Personal details__: This could include age, employment history, address and more. 

- __Type of credit provider__: This is relevant as there are varying levels of risk with different lenders. 

- __Size of borrowed credit__: How much you've borrowed and what kind of loan you're taking out affects your credit score e.g. there is a higher level of risk associated with home loans than a credit card. 

- __The number of credit enquiries__: A record exists of all past applications and you might be viewed as a higher risk individual if you've made many enquiries in a short span of time.

- __Existence of overdue debt__: This will negatively impact your credit score.

- __Debt agreements__: Default judgements, debt agreements and court writs are likely to lower your credit score.

%%Try our debt consolidation calculator%%

## Got a home loan question?
We're here to give you answers. Choose a time that to chat with a Home Loan Specialist and we'll connect you to an expert. 

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

Check your credit score for free, in minutes

Get mortgage-ready and take a peek into your financial health.

How much can you save by consolidating debt?

Calculate how much you could save by rolling your loans into one.

Try our debt consolidation calculator

Find out what your monthly repayments might look like. 

Calculate your monthly repayments

Afraid you're not getting the best home loan?

Compare rates from 25+ banks to see how much you could save.

Search an address for price estimates and sales history. 

Get a free property report in seconds

6 ways to improve your credit score quickly

Many Australians go into the property buying process with existing debt, and this doesn’t always impact on their ability to get approved for home loans. If you want to buy a home, it’s important to understand how your debt will impact on your borrowing power and approval likelihood. 

Here we’ll explain what borrowing power is, as well as how student debt, personal loans, car loans, credit cards and existing mortgages can impact your borrowing capacity. 

## What is borrowing power?

[Borrowing power](https://www.lendi.com.au/inspire/finance/how-much-can-i-borrow/) is a term lenders use to describe the loan size that they are likely to approve you for, based on your financial situation. If you have a high borrowing power, it means that lenders trust you to repay a larger home loan. 

Factors that can increase your borrowing power include:

- High income, in relation to how much you want to borrow
- Stable job
- Low debt
- Large deposit
- Assets
- Reasonable living expenses

Your borrowing power will likely be weak if you have a lot of debt, a bad credit history, a low deposit and poor financial management. Read about how to increase your borrowing power [here](https://www.lendi.com.au/inspire/finance/how-to-increase-borrowing-power/). 

%%Check your credit score for free, in minutes%%

## How student debt impacts your borrowing power

It’s very common for first home buyers to have student debt, and it generally won’t be a significant barrier towards getting a home loan. However, it can impact your borrowing power. 

Having a high debt to income level can make you a less serviceable borrower, but every bank calculates serviceability differently. How your university debt is viewed will vary between lenders, and also depend on other factors such as:

- The amount of debt
- Your income
- Your profession
- Any other debts

### How is HECS repaid?

Because of how university debt is structured and repaid in Australia, some lenders treat it differently to other common debts (e.g. car loans and credit cards). You start to repay HECS-HELP debt once you hit a certain income threshold and it will be automatically deducted from your wage. Unlike most other debts, interest is not charged on HECS-HELP, but it is subject to indexation.

%%Wondering how much you could borrow?%%

### Can I still get a home loan if I have a HECS debt?

Some lenders will treat HECS debt just like regular debt, but that doesn’t mean you won’t be able to get a home loan. This debt will simply become another consideration for your lender in calculating your borrowing power.

To improve your borrowing power you can:

1. Pay down your HECS-HELP debt. Note that this will delay you getting into the property market.
2. Increase your income through seeking a pay rise or getting an additional job.

If the rest of your home loan application is strong (i.e. solid income, minimal unsecured debt, stable job, healthy [credit rating](https://www.lendi.com.au/inspire/finance/6-ways-to-improve-your-credit-score-quickly/)), a reasonable university debt shouldn’t be a major issue. For example, it’s likely that a young dentist will have HECS-HELP debt, but they are also likely to have a high and stable income that will be viewed favourably. 

Want to check your HECS-HELP debt? Head to the [myGov](https://my.gov.au/) website. Here you can also make voluntary payments towards paying off the debt. 

## How personal loans impact your borrowing power

Personal loans can reduce your borrowing power as they are another expense that reduces how much you would reasonably be able to repay on a home loan each month. Personal loans usually attract higher interest rates, so they can take longer to repay than you might expect.

To reduce the impact of higher interest rates on unsecured debts like personal loans and car loans, you could consider [debt consolidation](https://www.lendi.com.au/home-loans/debt-consolidation/).  

One thing you can do to increase your borrowing power if you have personal loan debt is switching to a fixed rate for your personal loan. Lenders typically add a buffer of about 1.5% on top of variable interest rates to account for possible rises in the future. When they do this, your borrowing power decreases. Otherwise, focusing on paying down the debt is a smart option. 

%%How much can you save by consolidating debt?%%

## How credit cards impact your borrowing power

Remember that even if you repay your credit cards each month, some lenders will still view your credit card as a potential debt. So, if you have a credit card limit of $3,000 per month, a lender might see that as $3,000 of potential debt for every month. 

Even if they don’t view them as a potential debt, they will likely assume that you’re reaching the full limit every month because there is a possibility that you will in the future. This is something lenders need to account for when assessing an applicant’s borrowing capacity. 

If you don’t have a need for your credit cards, it might be wise to cancel them in the lead up to your home loan application process. If you still want to keep a credit card, consider reducing the limit to improve your borrowing power.

Having unpaid credit card debt will likely reduce your borrowing power, and it may be something to target before you apply for a mortgage. 

## How car loans impact your borrowing power

Car loans are often viewed similarly to personal loans. Both typically attract higher interest rates, due to usually being unsecured debts, and can limit your borrowing power. It might be a good idea to work on paying off your car loan debt. This will demonstrate to lenders your ability to make loan repayments and may strengthen your credit score. 

Opting for a fixed rate car loan can increase your borrowing power as lenders won’t apply the buffer to protect themselves against future rises in interest rates. 

## Existing home loan debt

If you already own a home, this can be beneficial - even if you still have a mortgage to pay off. Depending on your [loan to value ratio (LVR)](https://www.lendi.com.au/home-loans/lvr/), you may be able to [use your equity](https://www.lendi.com.au/inspire/finance/how-to-tap-into-your-home-equity/) to provide a larger deposit for your next property purchase. This will increase your borrowing power and if you are receiving any rental income from investment properties, this will also help boost your application. 

%%___widget equity%%

Having existing debt when you want to purchase property isn’t necessarily a major obstacle. There are always ways to improve your borrowing power and if you’re having trouble, it may be worthwhile to speak to a mortgage broker. Lendi’s [Home Loan Specialists](https://www.lendi.com.au/book-appointment/) are on hand to provide free expert advice, so get in touch today.

## Got a home loan question? Just ask!
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a [Home Loan Specialist here](https://www.lendi.com.au/book-appointment/)

*The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.*

Have you reviewed your interest rate lately?

Compare your rate with 25+ Aussie banks & lenders in 30 seconds.

Get free expert support with your home loan

Choose a time for one of our Home Loan Specialists to call you. 

Roll your credit card, car or personal loans into your home loan.

How your debt impacts your borrowing power

Your credit score is the numerical representation of your credit history. It gives credit providers an immediate insight into what kind of credit borrower you are.  

A high credit score can indicate trustworthiness, while a lower score can indicate that you may not be ready to handle more credit. 

In this article we’ll explain how your credit score is calculated, how it can affect your ability to get a home loan and how to improve your credit score.  

- __Related:__ [6 ways to improve your credit score quickly](https://www.lendi.com.au/inspire/finance/6-ways-to-improve-your-credit-score-quickly/)
- __Related:__ [Does home loan pre-approval affect my credit?](https://www.lendi.com.au/inspire/finance/does-pre-approval-affect-credit-score/)
- __Related:__ [Debt consolidation loans](https://www.lendi.com.au/home-loans/debt-consolidation-loans/)

&nbsp;
## How does a lender find out my credit score? 

When you [apply for a home loan](https://www.lendi.com.au/home-loans/basics/), the lender will perform a credit check through a credit reporting agency.  

The agency will provide them with a copy of your credit report, which will generally include your credit rating and credit score.  

While your [credit score](https://www.lendi.com.au/inspire/finance/tips-for-understanding-your-credit-score/) is not the only determining factor when a lender considers your home loan application, it does provide an indication of your reputation as a credit borrower.  

Having a higher credit score can improve your chances of being approved for your desired home loan, as well as your chances of getting a competitive interest rate.

%%Try Lendi's Credit Score tool%%

&nbsp;
## How is your credit score calculated? 

While all credit reporting agencies may use a different algorithm to calculate your credit score, the information that factors into it is usually similar: 

- Credit applications and enquiries you’ve made  
- Current and past debt 
- How you’ve handled past repayments 
- Any defaults and late repayments 
- Your credit cards and current credit limit 
- Other negative factors like bankruptcies and court judgements. 

&nbsp;
## How can you find out your credit score? 

If you’d like to know your credit score before applying for a home loan, you can find out for free through a [credit score provider.](https://www.creditsmart.org.au/know-your-credit-score/)  

Some credit reports may include your credit score, but most will just provide your credit rating. Your credit rating is the band that your score fits into (e.g. excellent, poor).

%%Wondering how much you could borrow?%%

&nbsp;
## How can I get a mortgage with bad credit? 

While maintaining healthy credit is a good goal to have as a borrower, sometimes things go wrong.  

Luckily, you may still have options if you want to get a mortgage but have bad credit. 

&nbsp;
### 1. Check your credit history 

First, make sure that your credit score is accurate. That means checking for any errors or indicators of fraud/identity theft on your credit report that could have negatively influenced your credit score. 

&nbsp;
### 2. Speak to a mortgage broker
&nbsp;

[Mortgage brokers](https://www.lendi.com.au/book-appointment/) work with all kinds of borrowers and can help you figure out your home loan options.

They’ll take the time to understand your situation and may be able to help you apply for loans suitable for your circumstances. 

&nbsp;
### 3. Find a specialist lender

While most lenders have strict credit score standards, there are some lenders that specialise in providing ‘bad credit’ home loans. 

These lenders often take into consideration personal factors and lifestyle changes that may have impacted your ability to repay loans in the past (e.g. job loss, divorce, hospitalisation). 

A mortgage broker can help you find a specialist lender if this appeals to you. 

If you do consider getting a bad credit home loan, you may have to accept that you’re unlikely to get the most competitive home loan deal. 

A lender taking on a borrower with a negative credit history is a significant risk to them, so you may be faced with a higher interest rate and fees.  

Since home loans for borrowers with poor credit are not always the most competitive, it may sometimes make more sense to wait until your credit score is better before borrowing.  

We’ll explain [how you can improve your credit score](https://www.lendi.com.au/inspire/finance/6-ways-to-improve-your-credit-score-quickly/) below. 

%%Want free expert help with your home loan?%%

&nbsp;
## What are the chances of getting a home loan with bad credit? 

Having bad credit can affect your ability to get a home loan, but it doesn’t necessarily make it impossible. 

Lenders consider more than just your credit history, but they are also legally obligated to lend responsibly. So, if your credit history suggests that you could have trouble repaying a loan, they are unlikely to approve your application. 

It also depends on just how ‘bad’ your credit score is. There’s a difference between rock bottom and slightly below average. 

While your likelihood of getting a competitive home loan from one of the big 4 banks is low with a bad credit score, you may still be eligible for a home loan from a specialist lender. 

It’s a good idea to [speak to a Home Loan Specialist](https://www.lendi.com.au/book-appointment/) if you have a complicated credit history and are interested in a loan from a specialist lender. 

Try to avoid haphazardly applying to several home loans at once as this creates credit enquiries in your credit file.  

Making too many loan applications can look suspicious or indicative of you having trouble with financial management.  

Take your time when researching and comparing home loans and try to just apply for one loan. 

&nbsp;
## Could deferring my home loan or missing a repayment affect my credit score? 
&nbsp;
### Home loan deferrals 

Very occasionally, borrowers may need to [defer their home loan repayments](https://www.lendi.com.au/inspire/finance/is-deferring-your-home-loan-repayments-a-good-idea/). 

Your credit score shouldn’t be impacted if you and your lender have agreed to defer your mortgage repayments. 

However, it’s very important that you and your lender are on the same page. If you defer your repayments without getting permission from your lender, it’s very likely that your credit score will be affected. 

&nbsp;
### Missed repayments 

[Missing repayments](https://www.lendi.com.au/inspire/finance/what-happens-if-youre-late-making-your-home-loan-repayments/) is a different story and the effect it has on your credit score will depend on various factors. 

For example, let's say you were very busy one month and your home loan repayment fell through the cracks of your memory. Most lenders offer a grace period for late repayments. So, you can usually get away with being a couple of days late without facing penalties. 

If you take longer than 14 days to make a repayment, this infraction will be recorded as a late payment in your credit report. Your lender is likely to charge a late fee as well.  

If you still haven’t paid after 60 days, you will have a default listed in your credit report which also negatively affects your credit score. 

You can avoid accidentally missing a repayment by setting up a direct debt payment system with your lender.  

A one-off late repayment will not affect your credit score as badly as a series of late repayments – so try not to make a habit of being late. 

%%Check today's competitive home loan rates%%

&nbsp;
## How can I improve my credit score?

Luckily your credit score is not fixed at its current figure forever. There are a number of ways you can improve your credit score, including: 

1. __Review your credit file:__ you can’t improve your credit score if you don’t know what’s in your credit file, so get familiar with it. This is also a good time to check for any inaccuracies or suspicious information that may be contributing to a negative credit score. 

2. __Make on-time repayments:__ it may be obvious but making sure your repayments are made on time is crucial to improving your credit score. If you’re forgetful you can set up direct debit payments. 

3. __Pay off existing debts:__ paying down any existing debt you have can make you appear like a more responsible borrower. Plus, the less debt you have, the easier your finances are to handle. 

4. __Pay your bills on time:__ paying bills on time and avoiding late payments can improve your credit score over time. Payments more than 60 days late can result in a default. 

5. __Avoid making too many credit enquiries:__ reconsider before submitting too many loan applications at one time as these can negatively impact your credit score. Only apply when you’re sure and in a good place to be borrowing credit. 

6. __Speak to a financial counsellor:__ there are free and confidential financial counsellors available that you can talk to if you’re feeling overwhelmed or financially stressed. They may be able to help you take steps towards better credit management. 

7. __Contact your lender’s hardship team if you can’t manage repayments:__ if you have existing debt that you’re struggling with, it’s best to get help before things worsen. Lenders have a hardship team that can help you manage your debt and minimise further harm to your credit score.  

If you’re interested in applying for a home loan but your credit could use some improvement, it’s often a good idea to speak to a mortgage broker.  

Our Lendi Home Loan Specialists will take the time to learn about your situation and tell you about your potential home loan options. [Book a free appointment today to learn more.](https://www.lendi.com.au/book-appointment/)  

&nbsp;
- Related: [6 ways to improve your credit score quickly](https://www.lendi.com.au/inspire/finance/6-ways-to-improve-your-credit-score-quickly/)

## How much could you save with a lower interest rate?

%%___widget home-loan-repayment%%

## Got a question?
Get free expert home loan guidance. [Schedule a callback](https://www.lendi.com.au/book-appointment/) from one of our Home Loan Specialists today.