Will I be allowed to refinance my tax debts?

Any general questions you might have in regards to loans and finance.
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fedup
Posts: 5
Joined: Fri Jul 31, 2015 6:21 am

Will I be allowed to refinance my tax debts?

Post by fedup »

Hey there,

I’m a medical consultant working for a general hospital in Bourke. It seems that I overlooked lodging my tax returns in the ATO. Now, my name’s been put on the bank’s blacklist and I owe a significant debt in taxation. I want to get a loan in order to refinance my tax debt with a suitable lender but I’m afraid that I may not be eligible for refinance.

What are the criteria to be eligible for a loan and how much will I be able to borrow?

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Otto Dargan
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Re: Will I be allowed to refinance my tax debts?

Post by Otto Dargan »

Hi and welcome to the forums fedup,

Most lenders may not approve a loan to refinance an outstanding tax bill from the Australian Taxation Office (ATO). However, with a specialist lender, you may be able to borrow up to 85% of the property value.

In case you have a tax debt, you may still be able to borrow, given that:
  • You already own a real estate that can be used as security for the loan.
  • Your total tax debt plus your current mortgage is less than 85% of the property value.
  • You have a reasonable explanation for your overdue repayments or bad credit history.
  • You can prove that you can afford the new mortgage with the help of pay slips, BAS, tax returns, bank statements, or an accountant’s letter.
You may even be able to qualify for a low doc loan on a case by case basis if you apply with the right lender.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

fedup
Posts: 5
Joined: Fri Jul 31, 2015 6:21 am

Re: Will I be allowed to refinance my tax debts?

Post by fedup »

Thank you so much for the informative reply, Otto but my bank doesn't seem to like refinancing tax debts. What could be the reason for this?

Also, some information and tips on how I can pay off the debt would be much appreciated :)

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Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Will I be allowed to refinance my tax debts?

Post by Otto Dargan »

Hi fedup,

Australian lenders have a strict policy in place that states that they will not refinance a loan if they have an outstanding tax debt. This may be because lenders consider outstanding tax debt to be a sign of:
  • Bad character: Failure to lodge tax returns with the ATO, or failure to make the repayments on time shows a lack of intention to repay debts in general.
  • Financial distress: An unstable financial position may clearly be visible if you’re applying to refinance your tax debts. Lenders may consider you to be in financial hardship and are concerned that you may not be able to repay your debt to them.
  • Repetitive problems: Lenders have learned over the years that people with tax debts have a higher chance of falling into another tax debt, or other financial problems in the future.
  • Security concerns: The ATO may sometimes make a claim from the sale proceeds of a property and take payments from the lender. In this situation, the lenders may make a loss.
You may be able to avoid refinancing to pay off your debt with the ATO by:
  • Staying in contact with the ATO if you owe them money. Also make sure that your accountant is regularly updated.
  • Following your accountant’s advice as they may have faced similar situations with other clients.
  • Being regular with your instalments until your debt has been refinanced.
  • Avoiding the ATO from taking legal advice against you, or lodging a caveat on your home.
It is recommended that you seek professional advice from a taxation expert.

You can also check out our website for more information on how you can pay off your tax debt. You can call us on 1300 889 743 or fill in our free online assessment form and speak with one of our brokers to find out if you qualify for a loan today.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

fedup
Posts: 5
Joined: Fri Jul 31, 2015 6:21 am

Re: Will I be allowed to refinance my tax debts?

Post by fedup »

The website has all the information I need! I think hiring the services of your mortgage brokers would save me a lot of hassle because my situation is kind of complicated. I’ll give you a call to schedule a visit soon.

Cheers! :)

randomuser
Posts: 6
Joined: Mon Mar 16, 2015 6:47 pm

Re: Will I be allowed to refinance my tax debts?

Post by randomuser »

Hello home loan forums,

I recently took out a loan to invest in real estate but because of a few issues I want to refinance the loan. Originally, I borrowed 90% LVR from the bank. Will the bank calculate the LVR differently now that I’m refinancing? Please help.

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Otto Dargan
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Re: Will I be allowed to refinance my tax debts?

Post by Otto Dargan »

Hi randomuser,

The method lenders use is similar to the way LVR is normally calculated. The only difference is that the lenders use their own valuation of the property to calculate the LVR in case the property is being refinanced.

The main reason for this is that the price that you paid for the property before will be completely irrelevant. The property market may have moved, or you may have made renovations on the property. In this case, an independent valuation from the lender may prove to be much more reliable.

You can use our LVR calculator to get an idea of how much you may be able to borrow. Please feel free to call us directly if there’s anything you’d like to discuss about your mortgage.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

randomuser
Posts: 6
Joined: Mon Mar 16, 2015 6:47 pm

Re: Will I be allowed to refinance my tax debts?

Post by randomuser »

It hasn’t been too long since I bought the house. I’d like to discuss more about my situation with one of your mortgage experts. I’ll call you by the end of the day to month to check if I can schedule a meeting with one of them.

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