Can you get a mortgage if you owe taxes in Australia?

Having tax debts in Australia complicates the mortgage application process, as lenders closely scrutinise these obligations to assess financial responsibility and creditworthiness. However, by managing tax debts proactively, improving overall financial health, and consulting with professionals such as a mortgage broker, Aussies with tax obligations can increase their chances of securing a mortgage.

Navigating the complexities of securing a mortgage is a daunting process for many, especially for Australians who owe tax. The intersection of tax obligations and mortgage eligibility is a critical area of concern for potential homebuyers, raising the question: Can you still secure a mortgage if you have outstanding tax debts?

Understanding Tax Debts in Australia

Tax debt refers to any taxes owed to the government that have not been paid by the due date. This can include liabilities such as unpaid income tax, Goods and Services Tax (GST), and other tax-related obligations. The Australian Taxation Office (ATO) is responsible for collecting these debts and has various measures in place to manage and recover unpaid taxes.

The Impact of Tax Debts on Mortgage Eligibility

When applying for a mortgage, lenders conduct a thorough assessment of an applicant's financial situation, including their existing debts. Tax debts are particularly scrutinised as they reflect on an individual's financial responsibility and creditworthiness. Lenders perceive tax debts as a significant risk, potentially affecting the applicant's ability to meet new financial commitments like a mortgage.

Lender’s Assessment Criteria

Mortgage lenders in Australia have a set of criteria they use to evaluate loan applications. Among these, the debt-to-income ratio is crucial; it measures how much of an individual's income goes towards servicing existing debts, including tax debts. High levels of debt, especially tax-related, can unfavourably tip this ratio, making it harder to secure a mortgage. Lenders also consider the applicant's credit score, which can be impacted by outstanding debts, including those owed to the ATO.

Strategies to Improve Mortgage Approval Chances

For those with tax debts looking to improve their mortgage approval chances, several strategies can be employed. Firstly, entering into a payment plan with the ATO to manage tax debts demonstrates a proactive approach to fulfilling tax obligations, which can be viewed favourably by lenders. Additionally, improving overall financial health by reducing other debts, saving for a larger deposit, and maintaining a stable income can enhance creditworthiness.

Moreover, consulting with financial advisors or mortgage brokers can provide tailored advice and strategies for managing tax debts in the context of a mortgage application. These professionals can offer insights into how different lenders view tax debts and suggest lenders more likely to accommodate applicants with such financial backgrounds.

Case Studies and Expert Opinions

There are numerous anecdotes of individuals who have successfully navigated tax debts to secure a mortgage. One couple who used the services of Principal Mortgages, had a significant GST debt due to their small business. Yet they managed to secure a mortgage by demonstrating a solid repayment plan with the ATO and showing consistent income from their business operations.

Experts in the field suggest that transparency with lenders about tax debts and having a clear plan for debt management are critical factors in successfully obtaining a mortgage. Mortgage brokers, in particular, can play a pivotal role in finding the right lender who is willing to work with applicants with outstanding tax obligations.


Owing taxes in Australia does not automatically disqualify an individual from securing a mortgage, but it does introduce additional challenges to the process. By understanding how tax debts affect mortgage eligibility and employing strategies to manage these debts, applicants can improve their chances of approval. The key lies in demonstrating financial responsibility, having a clear plan for managing tax debts, and seeking professional advice. With the right approach, achieving homeownership is still within reach for those with tax obligations.

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