04 Feb 2022

Will a Tax Lien Prevent Me from Getting a Mortgage?

Tax Lien and Obtaining a Mortgage

It’s normal to worry about how a tax lien impacts your ability to obtain a home loan. The impact depends on your current financial circumstances. In some cases, a lender will ask you about the outstanding tax debt. They want to know why you haven’t paid it off. Banks have conservative lending practices. They might not approve a mortgage application from an applicant who has a tax lien levied against them.

Mortgage House takes a different approach to this situation. As a non-bank lender, we have the freedom to find alternative solutions for our clients including those with outstanding tax liabilities.  Our loan specialists have the tools to efficiently evaluate all applications. In addition, we offer an array of financial products.

A conventional mortgage requires three months of bank statements and payslips. Plus, a 20% deposit. A homebuyer who satisfies those requirements will qualify for the home loan even though they have a tax lien. The situation becomes challenging when a homebuyer cannot satisfy those requirements. However, ways to overcome those challenges exist.

For example, first-time homebuyers can apply for a family pledge mortgage. If they provide a qualified guarantor, it increases their borrowing power and capacity to a 105% loan-to-value ratio. Thus, the 5% can go toward paying off the tax lien in some cases.

Our Mortgage House home loan calculator helps you see the big picture too.

Tax Lien and Obtaining a Mortgage Conclusion

In several cases, a tax lien does not prevent an individual from obtaining a mortgage. It all depends on how the finances balance out. To find out how the lien affects you, contact our Mortgage House loan specialists.

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