Understanding CRA Debt: Why It’s So Urgent

Owing money to the Canada Revenue Agency (CRA) can feel overwhelming. CRA interest and penalty rates often exceed 10% annually, which can make an already challenging financial situation worse.

Beyond the cost, the CRA has strong collection powers that can directly impact your financial stability. They can:

• Freeze your bank accounts without warning

• Garnish your wages or business income

• Register a lien on your property, which affects refinancing or selling

These actions can damage your credit score and limit your access to traditional lending options. That’s why acting quickly is critical before the CRA escalates the situation.

How a Private Mortgage Can Solve CRA Tax Debt

When traditional banks turn you away due to credit or income concerns, a private mortgage becomes a practical alternative.

Private lenders focus less on your credit history and more on three key factors:

1. Equity - the amount of value you have built up in your home

2. Income - proof that you can manage monthly payments

3. Exit Strategy - a clear plan to repay or refinance after the short-term loan period

If you own a property in Toronto or the surrounding areas with sufficient equity, a Toronto mortgage broker can often arrange financing within 5 to 10 business days.

This fast access to funds allows you to pay off your CRA balance in full, stopping interest charges and preventing legal enforcement.

Typical Client Profile for Private Mortgage Solutions

Private mortgages are particularly useful for Canadians who don’t fit the strict lending criteria of major banks.

Here’s a snapshot of common client types:

With a private mortgage, borrowers can replace unpredictable CRA penalties with a stable, interest-only monthly payment, typically at rates between 9–12%, depending on equity and risk profile.

Benefits of Working with a Toronto Mortgage Broker

Partnering with an experienced Toronto mortgage broker means more than just getting a loan, it means having an advocate who understands both the lending market and CRA processes.

Key benefits include:

• Fast funding: Receive approval and funds within 5-10 days

• Protect your assets: Avoid CRA liens or wage garnishments

• Flexible terms: Interest-only payments help manage cash flow

• No income verification stress: Perfect for self-employed or recently declined borrowers

• Short-term relief: Provides breathing room while preparing for long-term refinancing

Your broker will handle all negotiations, paperwork, and lender communications, ensuring you get the best terms possible, quickly and confidentially.

Real-Life Example: Turning CRA Debt into an Opportunity

A recent Toronto homeowner came to us with $43,000 in CRA debt and several unfiled tax returns. The CRA had already issued collection warnings and was threatening to place a lien on the property.

Using the home’s available equity, we arranged a 12-month private second mortgage within seven days.

This mortgage paid off the CRA balance in full and stopped all collection activity. The client now has a clear, interest-only payment plan and will refinance into a traditional mortgage once taxes and credit improve.

Outcome:

• CRA debt: $43,000 - Paid in full

• CRA actions: Stopped immediately

• Timeline: 7 days

• Long-term result: Credit protection and peace of mind

Why Private Mortgages Are a Smart Option for Tax Arrears

Choosing a private mortgage isn’t about taking on new debt. It’s about consolidating high-risk, high-interest CRA arrears into a manageable, secured loan.

This approach allows homeowners to:

• Stop CRA penalties and legal threats immediately

• Free up cash flow for business or personal use

• Protect credit history for future refinancing opportunities

Many clients find that within 12-18 months, they can refinance with a bank or credit union at lower rates once their tax situation is resolved.

FAQs About Using a Private Mortgage for CRA Debt

1. Can I get a private mortgage if I already have one?

Yes, many clients use a second mortgage to pay CRA debts. It’s based on the remaining equity in your property.

2. How quickly can I access funds?

Typically, within 5 to 10 business days, depending on the property appraisal and documentation.

3. Will CRA stop collections once I pay them off?

Absolutely. Once the balance is cleared, CRA releases liens or freezes, restoring your financial control.

4. What credit score do I need?

Private lenders don’t rely heavily on credit scores. They focus more on your property’s equity and repayment strategy.

5. Are private mortgage rates higher than bank rates?

Yes, but they’re temporary. Rates reflect short-term risk and speed, which can be a fair trade-off to protect your assets and credit.

6. What’s the exit plan after a private mortgage?

Most clients refinance into a traditional mortgage within 12 to 24 months once their taxes and credit are back on track.

Take Action Before CRA Does

If you’re dealing with CRA arrears, don’t wait for enforcement action. With help from an experienced Toronto mortgage broker, you can unlock your home equity, pay off tax debt fast, and regain financial control.

Your next step? Speak to a licensed broker who specializes in private mortgages for tax debt resolution. Acting today could prevent costly liens, garnishments, or damaged credit tomorrow.