Getting behind on your mortgage or tax payments is a serious situation that should be addressed as soon as possible. Late or missed mortgage payments hurt your credit score and may even cause you to lose your home. Tax arrears also put your home at risk as the government may register a lien against your residence, which will limit the sale of your property and may result in foreclosure.

 An alternative to selling your home to pay off debts from the proceeds is to work with private mortgage lenders directly or through a mortgage broker . In this blog, we provide an overview of scenarios related to mortgage and tax arrears, and some of the solutions available to you.

What are Mortgage Arrears?

The Canadian Bankers Association defines mortgage arrears as three or more months of non-payment, but this definition does not apply to all situations. When mortgage payments are scheduled on a weekly basis, for example, two or more missed payments may also create issues. In practice, lenders can start the foreclosure process, which is a process of transferring ownership to the lender, even after you miss just one monthly mortgage payment.

Mortgage arrears can happen for various reasons, including when you or a family member loses a job or encounters an unexpected financial or medical emergency. It is never a good idea to  avoid addressing the problem. You should contact the lender or a mortgage broker as soon as possible after missing your mortgage payment since the longer you wait, fewer options are available to you.

What are Tax Arrears?

Non-payment of your mortgage is not the only situation that puts your home at risk. The government can also register a lien on your house if property taxes for two calendar years are in arrears. Before that happens, the authorities will send reminder notices at regular intervals. They will also apply heavy fines and high interest rates to induce you to repay your tax arrears as soon as possible.

If repayment of tax arrears is not arranged with the Canada Revenue Agency, the government may seize your property, including your primary residence. If this happens, your home can be sold. Since the penalties and interest rates on tax arrears are extremely high and will be deducted from the proceeds after the sale, this is the worst-case scenario for any homeowner.

Your Options

A bank loan is typically not a viable option for most people since banks and larger lenders do not approve loans for individuals with mortgage or tax arrears. Paying out a lump sum in cash is also rarely an option due to the financial circumstances which caused the arrears to arise in the first place.

Debtors who chose to do nothing face the prospect of their houses being sold with the proceeds used to cover heavy fines and extremely high interest rates. Another scenario involves selling the house for the best possible price and using the proceeds to repay mortgage and tax arrears.

Fortunately, there is a better way to pay your mortgage and tax arrears without having to sell your property. One of the most widely-used options is to apply for a loan from private mortgage lenders who will not base their decision to approve your loan solely on your credit history. The loan amount from private lenders will vary depending on the property's value, and usually equates to 80% of the value of your home.

Get Help From EasyMortgageLend.com

Don’t try to manage mortgage and tax arrears on your own. Get expert advice from a mortgage broker at EasyMortgageLend.com.
Call (647) 895-3921 or complete our online form to learn how we can help you pay your mortgage and tax arrears without having to sell your property.