ATO debt consolidation

Clear the ATO with your home loan and get your cash flow back

Let us be straight with you. The major banks and other tier 1 lenders will not refinance to pay out ATO debt. These loans go to tier 2, near-prime lenders, at a higher rate and usually with a risk fee. It costs more than a standard home loan. What it buys you is the ATO paid in full, one manageable repayment and your cash flow back - with a plan to move back to a standard rate after around six months.

Check if I can consolidate Call 08 8270 5138

11.51%

ATO interest rate

October to December 2026, compounding daily

$1,650+

Monthly cash flow freed

$80k example, see below

Tier 2

Near-prime lenders

Where these loans go

~6 months

Then back to tier 1

Subject to conduct and criteria

Last reviewed: November 2026

Home›Home Loans›Debt consolidation›ATO debt consolidation

Jason Given - ATO debt consolidation specialist, Lendology Adelaide

Who you will deal with

Jason Given MFPA

Director and Mortgage Broker

Most ATO debt we see belongs to good business owners: a tradie whose tax built up over years of reinvesting in the business, a consultant who had one big year and did not put enough aside, a couple whose payment plan is eating every spare dollar. Jason works with you and your accountant to clear it properly - the right lender, a short payoff split, and a plan so it does not build up again.

ATO debt consolidation Self-employed Company directors Near-prime lending

Confidential consolidation check

Can you clear the ATO with your home loan? Find out in one call.

Tell us roughly what you owe and what your home is worth. Jason or Steve will tell you whether consolidating is possible, what the near-prime loan will really cost, how long until you can move back to a standard rate - and whether you are better off leaving the ATO plan alone. No credit check. Reply within one business day.

Why people consolidate

The real problem: what the ATO plan does to your cash flow

ATO plans are built to clear the debt quickly, so the instalments are big and come straight out of the business while interest compounds on what is left. Consolidating swaps that for one home loan repayment - at a near-prime rate, for around six months.

ATO general interest charge

11.51%

a year, compounding daily on the unpaid balance (October to December 2026).

Near-prime risk fee

0.5-1%

of the loan amount, one-off. The higher near-prime rate also applies to your whole loan, not just the ATO part.

Monthly outgoings freed

$1,650+

on our $80k example, rising to about $2,180 once you are back with a tier 1 lender.

The honest trade

Consolidating through a near-prime lender usually costs more in the short term than staying on the ATO plan, because your existing home loan moves to the higher rate too. People do it because the ATO plan is not affordable, payments have been missed, the ATO is taking firmer action, or several debts are compounding at once. It is a reset, not a saving - and the saving comes later, when you refinance back to a tier 1 lender.

Worked example

$80,000 owed to the ATO: the real cost of consolidating

An illustrative example: a home worth $850,000, a $480,000 home loan and $80,000 owed to the ATO.

	Stay on a 2-year ATO plan	Consolidate with a near-prime lender
Monthly outgoings (home loan + ATO)	about $6,780	about $4,960 to $5,140 for the first 6 months, then about $4,610 back with a tier 1 lender
ATO	Paid off over 2 years, plan must not be missed	Paid in full at settlement, enforcement stops
Interest on the tax debt, first 2 years	about $10,000	about $9,000 to $9,200
Extra interest on your existing $480,000 while near-prime	nil	about $2,400 to $3,700
Risk fee (0.5% to 1% of the loan)	nil	about $2,800 to $5,600
Total interest and fees, first 2 years	about $10,000	about $14,300 to $18,500
Still owing on the tax debt after 2 years	nil	about $51,000, on the 5-year split

Illustrative only, not a quote or an offer of credit. Assumes ATO interest at 11.51% (October to December 2026), a typical near-prime rate on the whole new loan for the first 6 months with a risk fee of 0.5% to 1% of the loan, then a refinance to a typical tier 1 rate. Refinancing costs not included. Home loan over 30 years; the ATO amount on its own 5-year split. Your numbers will differ.

So why do it?

If you can comfortably afford the ATO plan, stay on it - it is cheaper. Consolidating makes sense when you cannot: $1,650 to $1,800 a month back in the business straight away, the ATO paid in full and no more risk of the plan defaulting. The higher rate is short-term. After around six months of good conduct, and subject to lending criteria, we look at refinancing you back to a tier 1 lender, and your outgoings drop to about $4,610 a month. Never spread the tax debt over 30 years - even at a tier 1 rate that would cost more in interest than the $80,000 itself.

Do you have enough equity?

The quick equity check

Near-prime lenders generally want the new loan, including the ATO payout, at or below about 80% of your home's value. Some go a little higher at a higher cost. Here is the sum we start with.

Equity is only half the test. The lender also needs your income to cover the new repayments with a buffer, which is where up-to-date tax returns matter.

Example

Home value	$850,000
80% of value	$680,000
Less current home loan	- $480,000
Room to consolidate	$200,000

Enough to clear $80,000 to the ATO and $15,000 of credit cards, leaving the new loan at about 68% of the home's value. If the sum comes out negative, see the alternatives below.

Why the bank said no

Tier 1 lenders will not pay out the ATO. Tier 2 near-prime lenders will.

If your bank said no, that is normal. Major banks and other tier 1 lenders will not release equity to pay tax debt, and many decline as soon as an ATO plan shows in your statements. ATO consolidation is near-prime lending.

	Tier 1 (major banks and prime lenders)	Tier 2 (near-prime lenders)
Pay out ATO debt?	No	Yes, at settlement, often with cards, car and personal loans
Missed plan payments or years of build-up	Decline	Considered, with an explanation
Rate	Standard	Higher than tier 1, on the whole loan
Fees	Standard	A one-off risk fee, usually 0.5% to 1% of the loan amount
How long you stay	-	Around 6 months, then refinance back to tier 1, subject to conduct and lending criteria

What gets it approved

What stops most ATO consolidations - and it is usually not the debt

In our experience the files that stall are the ones where the paperwork is behind, not the ones with the biggest debts. When everything is ready, a near-prime approval can come through in a couple of weeks.

✓

Every tax return and BAS lodged

The biggest blocker by far. Without lodged returns a lender cannot see your income. Lodge everything first, even if it adds to the bill.

✓

Income on your returns that supports the loan

Lenders assess the income shown on your lodged returns and financials. If it does not support the new repayments, the loan will not work, however much equity you have.

✓

A current ATO statement of account

Lenders want the exact balance from the ATO portal, for you and for any company or trust. They check this on most self-employed files anyway.

✓

A payment plan, ideally kept

A plan you are keeping to shows the debt is under control. Missed payments do not rule you out with near-prime lenders, but they will ask why.

✓

A short explanation letter

How the debt arose and what has changed. We write it with you and your accountant.

✓

Full disclosure

Do not leave the ATO debt off the application. Lenders check ATO statements and see plan payments in bank statements, and leaving it out can sink the application - or worse.

Honest advice

When consolidating the ATO is the wrong move

Consolidation turns a tax debt into debt secured against your home. Sometimes that is exactly right. Sometimes it is not, and we will tell you.

You are on an interest-free ATO plan

Some small businesses are offered an interest-free plan for smaller debts. Swapping 0% for a home loan rate rarely makes sense - unless the instalments are crushing your cash flow and you have a clear plan.

It would go over 30 years

Spreading a tax debt across a full mortgage term can cost more in interest than the debt itself. We put it on a separate split with a 2 to 5 year payoff.

The cause has not been fixed

If whatever caused the debt is still happening, it can come back - and this time your home equity is already used. Sort out the cause with your accountant first.

You can afford the plan

If the ATO instalments are manageable, stay on the plan. Moving your whole home loan to a near-prime rate and paying a risk fee to clear a debt you can already handle costs you money.

Business debt

Company debt, director penalty notices and your credit file

The lending questions we get most from business owners.

Company or trust tax debt

A home loan can be used to pay out ATO debt owed by your company or trust, not just personal tax debt. Lenders will want the ATO statements for every entity involved.

Director penalty notices

If you have received a director penalty notice, speak to your accountant or a lawyer straight away. A refinance takes weeks, and the notice has its own deadlines.

Your credit file

The ATO can report a business to credit reporting bureaus if it has an ABN, owes $100,000 or more that is over 90 days overdue and is not engaging with the ATO. A listing narrows the lender choice but does not rule you out.

We do not give tax advice

We are mortgage brokers, not tax advisers. Anything about tax, deductions or how a loan to your business should be set up is a question for your accountant. We work alongside them.

The process

From first call to the ATO paid in full

We work alongside your accountant so you are not stuck in the middle passing messages.

Confidential check

Your debt, equity, lodgements and income in one call. No credit check. We tell you if it is possible and roughly what it costs.

Compare honestly

Stay on the plan versus consolidate with a near-prime lender. Real numbers on the whole loan, including the risk fee and the extra interest.

Build the file

ATO statements, financials, the explanation letter and a payout figure. We confirm current lender policy before lodging.

ATO paid, then back to tier 1

The ATO is paid in full at settlement. We set a short payoff split and diarise the refinance back to a tier 1 lender at around six months, subject to your conduct and lending criteria.

Check if I can consolidate Call 08 8270 5138

Not enough equity?

If a home loan cannot clear it, these are the other options

Negotiate the ATO plan. Your accountant can often get a longer or more realistic plan, especially if you engage early.
A business loan. Some business lenders fund ATO debt without property security, usually over a shorter term and at a higher rate. We can introduce you to a commercial specialist.
Sell or refinance another asset. An investment property, vehicle or equipment can sometimes clear the debt more cheaply.
Restructure the business. Companies with total debts of $1 million or less may be able to use the small business restructuring process. This needs a registered practitioner.
Talk to a free financial counsellor. The Small Business Debt Helpline (1800 413 828) and National Debt Helpline (1800 007 007) are free and confidential.

We will be honest with you: a short-term private or caveat loan against your home to pay the ATO is rarely a good idea, because of the cost and the risk to your home.

Before you apply

What to have ready

With these in hand we can usually tell you in one conversation whether consolidation is possible and with which kind of lender.

ATO statement of account from the portal (personal, plus company or trust)
Payment plan details and repayment history
Last two years of tax returns and notices of assessment
Business financials and recent BAS
Current home loan statement and a rough property value
Statements for any cards, car or personal loans to include
A short letter from your accountant on how the debt arose

Common questions

FAQs

Can I refinance my home loan to pay off ATO debt?

Often, yes, but not with a major bank. Tier 1 lenders will not release equity to pay tax debt, so these loans go to tier 2, near-prime lenders at a higher rate, usually with a risk fee. You need enough equity and your tax returns lodged. The new lender pays the ATO directly at settlement.

Why did my bank say no?

Because tier 1 lenders do not do this. Most will not lend to pay tax debt, and many decline when an ATO plan shows in your bank statements. It is policy, not a judgement on you. Near-prime lenders assess it differently.

How much more will it cost?

The higher rate applies to your whole loan, not just the ATO part. Near-prime lenders also charge a one-off risk fee, usually 0.5% to 1% of the loan. In our $80,000 example, consolidating costs a few thousand dollars more over two years than staying on the ATO plan - but frees up $1,650 or more a month. We show you the real numbers for your file.

Is it better to keep the ATO payment plan or consolidate it?

If you can comfortably afford the plan, keep it, especially if it is interest-free. Consolidate when the plan is not affordable, payments have been missed, the ATO is taking firmer action, or other debts are compounding too. If you do, put the tax debt on a separate split over 2 to 5 years, never 30.

How long do I stay with a near-prime lender?

Around six months. With the ATO cleared and your repayments made on time, we look at refinancing you back to a tier 1 lender at a standard rate, subject to your conduct and lending criteria at the time. Check the near-prime loan's exit fees before you sign.

How much equity do I need?

Near-prime lenders generally want the new loan, including the ATO payout, at or below about 80% of your home's value. Take 80% of your home's value, subtract your current loan, and that is roughly your room to consolidate.

Do I have to tell the lender about my ATO debt?

Yes. Lenders check ATO statements and bank statements, and leaving a debt off an application can lead to a decline or worse. Being upfront, with an explanation and a plan, gets far better results.

Can my company's tax debt be paid with my home loan?

Often, yes. Lenders will want the ATO statements for both you and the company. How it is set up between you and the company is a question for your accountant.

What if I do not have enough equity?

Options include renegotiating the ATO plan, a business loan, selling or refinancing another asset, or a formal restructure. The Small Business Debt Helpline on 1800 413 828 is free and confidential.

Sources

Where the ATO facts come from

Last checked November 2026. The ATO interest rate changes every quarter. This page is general information about lending. It is not tax, legal or financial advice - speak to your accountant about the tax side of your debt.