Borrowing Against Your Home to Repay a Tax Bill
If you’re facing a large tax bill (upcoming or already overdue), borrowing against your home can be a practical way to repay it without draining savings or disrupting cash flow.
Many homeowners opt for a secured loan (also called a second charge mortgage) to clear tax liabilities and to spread the cost over a manageable monthly payment.
Can You Borrow Against Your Home to Pay a Tax Bill? 🤔
Yes! If you own a property with sufficient equity, it may be possible to borrow against it to repay most types of tax bills, including:
Self-Assessment tax
Corporation tax
Capital Gains Tax
VAT arrears
Some high-street mortgage lenders may restrict borrowing for this purpose. However, specialist lenders may be able to consider applications on a case-by-case basis, subject to affordability and suitability.
What Is a Secured Loan? 🏠
A secured loan is borrowing that is secured against your property, in addition to your main mortgage. It allows you to raise a lump sum while keeping your existing mortgage and rate unchanged.
This is often used when:
Remortgaging would trigger early repayment charges
A further advance is unavailable due to lender criteria or affordability
Affordability has changed since your mortgage started
Funds are needed for a specific or time-sensitive purpose
Using a Secured Loan for an Upcoming Tax Bill 📅
Borrowing against your home may allow you to:
Pay the tax bill in full
Avoid late payment interest or penalties
Spread the cost over a longer term (typically 5–25 years)
This is commonly explored by self-employed individuals, company directors, and landlords. In some cases, lenders may be willing to pay HMRC directly to ensure the liability is cleared.
Using a Secured Loan for Tax Arrears ⏰
If a tax bill has already fallen overdue, pressure can increase quickly. HMRC may add interest, penalties, or take enforcement action. While payment plans may be offered, these are often over relatively short terms, which can place strain on cash flow.
A secured loan may be used to:
Clear the outstanding balance
Prevent further charges or escalation
Restore predictable monthly outgoings
Tax arrears do not automatically prevent approval, provided the loan is affordable and there is sufficient equity.
What Will Lenders Look At? 🤵🏻
To obtain a secured loan, lenders will look at:
Property value ✅
Many of our lenders can lend up to 95% of the value of your home
E.g a £200,000 property with a £140,00 mortgage, you could potentially raise an additional £50,000
Existing mortgage balance and lender ✅
Your existing mortgage balance will affect how much you can borrow, as this will be factored into the loan-to-value (LTV).
Consent from your existing lender is often required, which we arrange as part of our service.
Income and affordability ✅
Lenders must ensure the loan is affordable, and this is done through an income and expenditure assessment.
Credit profile ✅
Less focussed on score, but more on recent credit conduct. e.g any defaults or CCJs in the last 12-24 months?
Specialist lenders want to help, and if they can see the loan will put you in a better financial position and it is affordable, then there’s a good chance they can offer to lend.
What are the Risks of Borrowing Against your Home? ⚠️
The loan is secured against your home ⚠️
If you fail to keep up repayments, your property may be repossessed, just like with a traditional mortgage.
The term may mean you pay back more over time ⚠️
While secured loans can offer long repayment terms, spreading borrowing over a longer period may increase the overall cost.
However, when your home is used as security, specialist, regulated advice is essential, that’s where we step in!
Speak to a Secured Loan Expert Today 💬
Everyone’s circumstances are different, so we always take the time to understand your situation before making any recommendation.
We only charge a fee on completion (fully disclosed before you proceed), meaning there is no cost to explore your options with an adviser.
Celtic Finance is authorised and regulated by the Financial Conduct Authority and provides a bespoke, advised service specialising in complex capital-raising cases.
⬇️Speak to us today to see how we can help! ⬇️
Office: 0800 1244 566
WhatsApp: 07537 141 209
Email: info@celticfinance.co.uk
