Tax debt · 3 min read
CRA debt and your mortgage: what's still possible
Why tax arrears make most lenders step back, and what a file needs to look like for the ones that don't.
Why lenders treat CRA differently
CRA has collection powers that ordinary creditors don't, including registering against your property. A lender assessing risk sees a creditor who can step in front of them.
That's why many simply won't proceed while a balance is outstanding — not because your file is bad, but because of who else has a claim on the asset.
The trap this creates
The borrowing that would clear the debt is the borrowing you can't get because of the debt. People sit in that loop for years, watching the balance grow.
It's one of the clearest examples of a situation where the automated answer and the right answer are different.
What can work
Some lenders will consider a file where the proceeds clear the arrears at closing, so the debt is gone at the moment the mortgage funds. That has to be structured deliberately and presented that way from the start.
A documented payment arrangement in good standing helps. So does a clear account of how the arrears arose and why they won't recur.
Tax debt narrows the field considerably. It doesn't always close it — and the difference is usually in how the file is put together.