How to get a home loan with an ATO tax debt

If you have a tax debt, it doesn’t mean you can’t be approved for a home loan. Here’s what you need to know about borrowing to buy property when you owe money to the Australian Taxation Office (ATO).

How to get a home loan with an ATO tax debtThe end of the financial year can be a stressful time for many as we try to manage our expenses and get our finances in order before the tax man pays us a visit.

While having an ATO debt is not ideal, this doesn’t disqualify you from borrowing money for a home loan. In fact, there are several steps you can take to consolidate your tax debt in order to get the finance you need.

Can I get a home loan if I have a tax debt?

When you apply for a home loan, you need to give the lender a complete picture of your financial situation. As well as details about your income, your employment and your assets, you’ll need to provide details about your liabilities, including car loans, credit card debt and tax debt. Lenders will then use this information to assess your borrowing capability and whether or not you have the capacity to keep up to date with your home loan repayments.

The size of your tax debt and your history of repaying the debt will be crucial factors that a lender will consider when reviewing your application. One option worth considering is refinancing your tax debt and combining it with the new home loan you take out. While Australian banks are highly unlikely to allow you to refinance your debt to the ATO, there are non-bank lenders available who may be able to help.

They will take into account the reason for your tax debt and the steps you have taken to repay it when deciding whether or not to offer you a loan. Some lenders are more conservative than others, so this will affect their final decision.

How to get approved for a loan

Each lender has its own approach to risk that borrowers must satisfy in order to be approved for a loan. However, there are several steps you can take to improve your chances of getting approved for a loan:

  • Provide evidence of income. From pay slips and bank statements to business activity statements, you’ll need to supply proof of income to your lender so that your propensity to repay the loan can be evaluated.
  • Manage your debt. If you have a tax debt in your name, the lender will assess what steps you are taking to pay off the money you owe. So if you’ve set up a payment plan with the ATO and made regular instalments over a period of six months or more, the lender will view your loan application in a more favourable light.
  • Provide explanation for your tax debt. There are several reasons why you may have ended up with a tax debt: perhaps you made an error on your return, maybe you were late lodging your return, or you may have incurred a large capital gains tax bill. You’ll need to provide the lender with a reason for your tax debt, and this reason may affect its decision to offer you financing. For example, if an error by your accountant led to the bill, you’ll most likely be seen as a more reliable borrower than someone who forgot to complete their tax return on time.
  • Try to stay out of court. If you have a history of missing repayments or if you have failed to communicate effectively with the tax office, the ATO may launch legal action against you. This could lead to a court writ or judgment being included in your credit file. which will count against you in the eyes of lenders. Make sure you liaise with the ATO every step of the way to signal your intention to repay the debt as quickly as possible.

Tips for paying off tax debt

Keep the following tips in mind to ensure that you repay your tax debt to the ATO as quickly as possible:

  • Stay in touch with the ATO. It can be tempting to ignore repayment notices and correspondence related to your tax debt, but this will only lead to more financial pain. You or your accountant will need to keep in regular touch with the ATO and respond to any requests for information as quickly as possible.
  • Set up a payment plan. Set up a payment plan with the ATO to help you pay off your debt at an affordable rate. Do everything you reasonably can to make sure that you pay your regular instalments on time.
  • Listen to your accountant. You pay your tax accountant for advice, so listen to what they say. Experienced accountants will have been through the process several times before with other clients and can help you get your finances back on track.
  • Consider refinancing. While banks are reluctant to refinance tax debt, there are several other lenders who can help. Consider the refinancing options available to find one that will allow you to consolidate your debt into an affordable loan.

Compare current home loan deals

Rates last updated August 19th, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.59%
3.59%
$0
$0 p.a.
80%
Special discounted interest rate
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.64%
3.66%
$0
$0 p.a.
80%
Competitive interest rate and limited fees
A simple mortgage with a competitive interest rate and no application or monthly fees. Borrow up to $2 million from a convenient online lender.
3.64%
3.65%
$0
$0 p.a.
80%
Get approved faster with a speedy online application
Low interest rate and limited fees. Add a 100% offset account for $10 a month.
3.68%
3.82%
$0
$10 monthly ($120 p.a.)
80%
Earn Velocity Frequent Flyer Points with this mortgage to spend on flights and more (subject to eligibility requirements). Redraw facility available on this variable rate home loan. Competitive interest rate.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account
Unlock a range of savings with this competitive package home loan offer. Offset account and redraw facility included.
3.74%
3.74%
$0
$0 p.a.
80%
A basic owner-occupier home loan with a low variable rate that requires a 20% deposit.
3.70%
3.70%
$0
$0 p.a.
70%
You need a 30% deposit to get this mortgage
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.54%
3.59%
$0
$0 p.a.
80%
$900 cashback offer on settlement
Get a competitive rate, save on fees and access a 100% offset account plus redraw facility.
3.64%
3.64%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.64%
3.78%
$0
$10 monthly ($120 p.a.)
80%
Earn thousands of Velocity Frequent Flyer Points on your mortgage (subject to eligibility requirements). Plus, access a 100% offset account to save on interest.
3.84%
3.84%
$0
$0 p.a.
80%
Low fee online mortgage
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.72%
4.10%
$0
$395 p.a.
80%
100% offset account plus package discounts
New borrowers or refinancers from another lender get a discounted rate with this package loan.
3.64%
3.68%
$0
$0 p.a.
80%
A competitive interest rate for first home buyers that keeps fees low. You will need a 20% deposit and can borrow up to 500000.
3.88%
4.40%
$0
$395 p.a.
90%
Lock in a very competitive 2 year rate and get package discounts on your credit card and offset account.
3.49%
4.57%
$0
$395 p.a.
90%
Save on interest with a 100% offset account
Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
3.75%
3.75%
$0
$0 p.a.
70%
This sharp rate product requires a 30% deposit
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.98%
4.41%
$0
$395 p.a.
90%
Take advantage of a low 3 year fixed rate, 40% offset account and no application fee.
3.65%
3.66%
$0
$0 p.a.
80%
Sharp interest rate and low fees
This special rate mortgage has no ongoing fees and offers flexible repayments. Save $595 in establishment fees before 30 September.
3.64%
3.64%
$0
$0 p.a.
70%
A basic variable home loan that offers a competitive interest rate with no application fees and no ongoing fees.
3.70%
4.13%
$0
$395 p.a.
90%
Get this loan with a 10% deposit
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.68%
3.70%
$0
$0 p.a.
80%
Get a low rate and save on fees
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
3.65%
3.66%
$0
$0 p.a.
90%
Competitive interest rate and low fees. Available with a 10% deposit. Partial offset account attached (offset up to $15,000).
3.64%
3.79%
$0
$10 monthly ($120 p.a.)
70%
100% offset account and a competitive rate
Low rate, low fee loan for owner-occupiers. You will need a 30% deposit to get this mortgage.
3.64%
3.79%
$0
$0 p.a.
80%
Fast online application
Apply online for this fixed rate, low-fee loan with redraw facilities and an optional offset account.
3.72%
3.74%
$0
$0 p.a.
80%
100% offset account and a 10% deposit option
Save on interest by taking advantage of a 100% offset account along with no ongoing fees or application fees.
3.84%
3.82%
$0
$0 p.a.
80%
A fixed rate loan with free redraws, few ongoing fees. Apply online with a fast approval process.
3.85%
3.85%
$0
$0 p.a.
80%
Flexible, low fee mortgage
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan. Split and redraw facilities included.
3.79%
3.79%
$0
$0 p.a.
80%
Minimal fees and a 100% offset account
Access an offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.59%
4.74%
$0
$395 p.a.
90%
Get this package loan with a 10% deposit
Enjoy a competitive rate with no application fee for this package loan.
3.74%
3.74%
$0
$0 p.a.
110%
Borrow up to 110% with a guarantor
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.74%
3.79%
$600
$0 p.a.
80%
Low interest rate for new customers
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
3.76%
4.15%
$0
$395 p.a.
90%
Discount special offer with a 100% offset account
A high maximum LVR home loan with redraw facility and additional payments. Get this mortgage with a 10% deposit.
3.72%
4.11%
$0
$349 p.a.
90%
10% deposit option available
Package your loan with other AMP products and save on rates and fees.
3.62%
4.49%
$0
$0 p.a.
80%
Get a competitive rate and avoid ongoing fees. This loan is only available to current and former employees of eligible Queensland government organisations.
3.71%
3.71%
$0
$0 p.a.
70%
A variable rate home loan that has a lot of flexible features. This loan has a 100% offset account.
3.64%
3.69%
$600
$0 p.a.
80%
Low fees and low interest rate
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.59%
4.14%
$395
$0 p.a.
80%
Competitive interest rate
A one year fixed rate offer with no ongoing bank fees.
3.97%
3.99%
$0
$0 p.a.
80%
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.04%
4.07%
$0
$0 p.a.
90%
Get this loan with a 10% deposit
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.99%
4.44%
$395
$0 p.a.
80%
Pay no ongoing fees on this investment loan fixed for 3 years.
3.89%
3.94%
$0
$0 p.a.
90%
Available with a 10% deposit
Borrow up to 90% of the value of the property you're buying, and pay no application fee.
3.70%
3.90%
$0
$0 p.a.
70%
Requires a 30% deposit
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.75%
4.00%
$0
$248 p.a.
70%
100% offset account included
Borrowers with a 30% deposit can get this competitive rate.
3.99%
5.17%
$600
$0 p.a.
90%
Available with a 10% deposit
Competitive rates for fixed for 3 years with redraw facility.
3.59%
3.99%
$600
$395 p.a.
95%
Get interest rate discounts and waived fees on this package loan with a 100% offset account.
3.99%
3.99%
$0
$0 p.a.
70%
Save on fees with this investor mortgage
Investors with a 30% deposit can get this low rate loan to fund their property portfolio.
3.91%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.81%
3.81%
$0
$0 p.a.
80%
A home loan with a competitive rate and plenty of handy features. This product comes with a 100% offset account.
3.74%
4.01%
$395
$0 p.a.
80%
Lock in a low rate for 3 years
A competitive fixed interest rate product with no ongoing bank fees.
4.31%
3.95%
$0
$0 p.a.
80%
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.29%
4.31%
$0
$0 p.a.
80%
Flexible, low fee mortgage
Investors will pay no application or ongoing fees for this interest-only loan.
3.74%
3.74%
$0
$0 p.a.
80%
Low rate for people borrowing under $200,000
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule.
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.89%
4.94%
$595
$0 p.a.
90%
10% deposit option available
Borrow up to 90% of the value of the property you're buying and pay no application or ongoing fees.
4.18%
4.18%
$0
$0 p.a.
80%
Competitive investment mortgage
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.99%
4.86%
$0
$0 p.a.
80%
Fix your rate for 2 years
Access a fee-free 100% offset account and pay no application or ongoing fees.
4.29%
4.26%
$0
$0 p.a.
95%
A competitive 3-year fixed rate loan with a high max insured LVR.
4.14%
4.81%
$0
$0 p.a.
80%
No ongoing fees
Pay no application fees and access a fee-free redraw facility with this fixed rate loan.
3.99%
3.99%
$0
$0 p.a.
80%
Special discounted interest rate
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
4.14%
3.96%
$0
$0 p.a.
80%
Low fee investor mortgage
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.14%
4.17%
$0
$0 p.a.
80%
Competitive rate for investors
Investors can enjoy flexible repayment options and pay no application or ongoing fees.
3.84%
3.91%
$0
$0 p.a.
80%
Flexible low fee mortgage
Enjoy a fast application process and flexible repayment options with this fixed rate mortgage for investing.
4.24%
4.27%
$0
$0 p.a.
95%
Low deposit loan for investors
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
3.80%
4.95%
$300
$35 monthly ($420 p.a.)
90%
Competitive 1 year fixed rate mortgage.
3.94%
3.92%
$0
$0 p.a.
80%
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.

Compare up to 4 providers

Image: Shutterstock
Was this content helpful to you? No  Yes

Related Posts

Home Loan Offers

Important Information*
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64% p.a.
comp rate of 3.66% p.a.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150k+ Owner Occupier, P&I) Discount 1

New borrowers or refinancers from another lender get a discounted rate with this package loan.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.

2 Responses

  1. Default Gravatar
    WetworkerNovember 16, 2016

    My wife and I are hoping to buy a home very soon. We have deposit in bank of about 20% of the value of homes we are looking at. Most of this is proceeds from the sale of my wife’s house and some savings we have added in last 6 months. Repayments will be quite comfortable, considerably less than we are paying as rent and allow room for interest rate increases without stressing much.

    The sticky bit is I have a tax debt. The debt arose when I was operating a small business a number of years ago and wasn’t diligent in getting activity statements and returns done as I should have. This debt was incurred before I met my wife. I have made some contribution toward paying the debt. I have contacted the accountant that prepared my returns for the years in question to try to get the activity statements completed. When he was preparing the returns he didn’t think they would be required as he was confident the ATO would release the debt. I was unemployed and on sickness benefit for a period of time and ATO did release the debt. When I started working and lodged a tax return the debt was reinstated about 12 months ago. The debt was raised 7-9 years ago.

    As I understand home loan requirements (I have never had a home loan or owned/part owned a home)the Lender would prefer the loan to be in both our names (joint application). If we do this would the ATO be able to prevent the loan or force us to sell it to cover the debt that I have?
    Alternatively, If the loan was in my wife’s name only would the ATO have a problem with that? As I earn more than my wife some of my income would go toward servicing the loan. It might be possible for my wife’s income to service the loan and my income used for food, fuel, car expenses, etc so I wasn’t actually contributing to the payment of the mortgage.

    Constructive advice appreciated.

    • finder Customer Care
      MayNovember 22, 2016Staff

      Hi Wetworker,

      Thank you for contacting finder.com.au – a financial comparison website and general information service designed to help consumers make better decisions.

      Sorry for the delayed reply. Generally, all lenders will assess their applicant’s financial position and will take into account including but not limited to your assets, income, other debts and liabilities, credit rating, etc. So either you or your spouse will apply for the loan, the same assessment will be done. Obviously, you’ll need to be in good standing in your financial position as that would tell your capability of paying off the loan.

      Furthermore, whether you or your spouse will apply for the loan, as you have an outstanding debt with ATO, most likely your tax debt and repayments history are critical factors that a lender will consider in approving your loan application.

      Nonetheless, you still have the option to refinance your tax debt and combine it with the new home loan you take out. Unfortunately, most banks do not offer to refinance your tax debt, but some non-bank lenders may be able to help. You can discuss your loan options by contacting a non-bank lender featured on this page. Again, your approval will still be on a case-by-case basis, depending on their assessment financial circumstance.

      Hope this helps.

      Cheers,
      May

Ask a question
Go to site