Can I Refinance CRA Debt?
Potentially, yes. If you own a home with sufficient equity, alternative mortgage financing may provide a way to deal with CRA debt when traditional bank refinancing is not available.
← Back to Alternative Financing QuestionsCRA Debt Does Not Automatically Prevent You From Refinancing.
The important questions are how much is owing, whether the CRA debt has been registered against the property, how much other debt is secured against the home and whether there is enough equity to support the required financing.
Use Available Home Equity
If the property has sufficient equity, mortgage financing may be used to raise funds to address outstanding CRA debt.
Confirm the CRA Balance
We need to know the current amount owing so the required mortgage can be sized properly and the overall transaction can be assessed.
Determine Whether a Lien Is Registered
Simply owing CRA money and having a registered CRA claim against the property are not the same situation. A registered claim can affect how the financing must be structured and completed.
Review All Other Mortgages and Liens
Existing mortgages, judgments and other registered debts affect the total amount owing against the property and the equity available.
Confirm the Property Value
A current appraisal is generally required because the lender needs to establish the property value and resulting loan-to-value.
Choose the Right Lender
If a conventional bank will not approve the file, an alternative or private lender may still consider the transaction based on the property, equity and overall risk.
Owing CRA Money and Having a Registered Claim Are Different Problems.
If the CRA debt has not been registered against the property, the financing may be more straightforward than a situation where a claim or lien already appears on title.
Once something is registered against the property, the lawyer and lender need to understand exactly what must be paid or otherwise dealt with in order to complete the new mortgage.
We need the current balance and any available CRA documentation relating to the debt.
If a claim is registered against the property, its position and amount matter to the financing.
Every mortgage, lien and judgment affects the available equity and required loan amount.
The appraisal tells us whether the property has enough equity to support the proposed solution.
The Mortgage Should Solve the Tax Problem — Not Simply Postpone It.
Refinancing CRA debt can be useful when it resolves the immediate obligation and creates a sustainable financial structure going forward.
There Is Enough Equity
The property must support the existing mortgages, CRA debt and any other amounts that need to be addressed through the refinance.
The Required Mortgage Is Realistic
We need to calculate the full financing requirement rather than looking only at the CRA balance in isolation.
The New Payment Is Manageable
A refinance should improve the overall situation. The new mortgage payment still needs to make sense for the homeowner's cash flow.
The Cause of the Tax Debt Is Understood
It is important to understand why the CRA debt accumulated so the same problem is not recreated after the refinance.
There Is an Exit Strategy
If alternative or private financing is used, there should be a realistic plan to move to better financing, repay the mortgage or sell later if necessary.
The File Moves Before It Gets More Complicated
CRA debt is better addressed before additional collection or registration issues make the financing more difficult to structure.
Home Equity May Provide a Way to Deal With CRA Debt.
If you own a home with sufficient equity, CRA debt does not automatically eliminate your refinancing options. The first step is to confirm the debt, property value, existing mortgages and any registrations against the property, then determine whether alternative financing provides a workable solution.
Let's Talk →