Why acting early matters
CRA interest and penalties accumulate steadily, and unresolved debt can lead to a lien registered against your property, which complicates future refinancing or selling. Addressing the debt before a lien is registered generally gives you more financing options.
How a refinance or second mortgage helps
Refinancing your existing mortgage or taking a second mortgage against your home equity can provide the lump sum needed to pay CRA in full, often stopping accumulating interest and penalties immediately and replacing it with a single manageable mortgage payment.
- Stops CRA interest and penalty accrual
- Consolidates into one monthly payment
- Can be arranged even after a lien in some cases
Working with lenders when a lien exists
Once CRA has registered a lien, bank options often narrow, but private and alternative lenders frequently have experience clearing tax liens as part of the closing process, using part of the loan proceeds to pay CRA directly through the lawyer.
Preventing the situation from repeating
Resolving the immediate debt is only half the solution. Working with an accountant on installment payments or adjusted withholding going forward helps avoid falling into the same position again, particularly for self employed homeowners with variable income.
Frequently asked questions
- Can I refinance my home if CRA has already registered a lien?
- In many cases yes, especially through private lenders, as long as there is enough equity to pay off the lien and cover closing costs.
- Will paying off CRA debt with home equity save me money?
- It often can, since CRA interest and penalties tend to be higher than typical mortgage rates, though the exact savings depend on your specific numbers.
- Does a lawyer handle paying CRA directly during the refinance?
- Yes, your real estate lawyer typically pays out the CRA debt directly from the mortgage proceeds at closing to ensure the lien is properly discharged.