Mortgage Solutions · Tax Arrears
CRA and municipalities have collection powers other creditors don't: liens, garnishment, even a tax sale, with no court order. Using your home's equity to pay the debt is almost always cheaper than waiting. But the cost climbs the longer you wait.
▍ The escalation clock
The key trigger is before CRA registers a lien. Walk the stages and watch which financing routes stay open, and what happens to the cost once a lien hits title.
Interest accrues at CRA's prescribed rate plus penalties, daily. No lien yet, so your full range of financing options is open, and at the best pricing you'll ever get on this file.
Once a tax lien hits title, you're limited to private financing at much higher rates, and many lenders won't touch the file at all. The whole game is acting before that line.
Where this comes up
If you have any of the following, financing to clear the debt is almost always cheaper than ignoring it and letting interest and enforcement compound.
Accumulating interest at the prescribed rate plus penalties, growing every month it sits.
Municipalities can sell your home at a tax sale after three years of arrears in Ontario.
For self-employed business owners, often the single largest category of tax debt.
Payroll remittances owed by incorporated owners; CRA treats these as trust funds and pursues them aggressively.
Large balances from a reassessment that came in well above what you reported.
Act before CRA registers a lien or starts enforcement. After that, options shrink and rates jump.
How much, and which route
The math is the same as any equity take-out: home value × LTV − existing mortgage = available capacity. The right route depends on where you are on the clock.
| Route | Max LTV | Speed | When it fits |
|---|---|---|---|
| A-lender refinance | Up to 80% | 3–4 weeks | No lien yet, clean-ish credit. The lawyer pays CRA from proceeds, then registers the new mortgage. Cheapest route. |
| B-lender refinance | Up to 80% | 2–3 weeks | More flexible on credit and income; rates a bit higher than A. |
| Private second mortgage | Up to 85% | 1–3 weeks | The fastest option; rates 9–14%. Often the move once a lien is in play. |
| Private first mortgage | Up to 75% | 1–2 weeks | When an A or B refinance isn't possible: lien already registered, severe credit, complex situation. |
The order matters: try an A-lender first if there's room, then B, then private. We always quote at least two routes so you see the all-in cost difference, not just the fastest yes.
The quirks generic brokers miss
Including interest accrued to the estimated closing date. CRA balances change daily; the lawyer needs an accurate number to fund correctly.
We never refund cash to the borrower to pay CRA themselves. Lenders require evidence the debt was cleared with the mortgage funds, received the same day any lien is discharged.
If there's a lien registered, we coordinate the discharge documentation so title is clear when the new mortgage registers.
Most tax-arrears solutions need to be temporary. If you used private financing, we map the path back to bank rates over the next 12–18 months once the immediate fire is out.
If you're self-employed and behind on HST or source deductions, we connect you to a CPA who can help structure remittances so you don't end up in the same place a year from now.
No commitment to start. The earlier we look, the more routes stay open. Tell us the balance and whether there's a lien yet.
Common questions
Tell us about your situation. We'll match you to the right product and lender.
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