Can I Get A Mortgage If I Owe Taxes?

We get this question a lot in our office: can I get a mortgage if I owe taxes? Some clients may have fallen behind on their income taxes or they might be fighting the CRA disputing some claim. Others haven’t filed their income taxes yet. Still others have fallen behind on their property taxes.

The Government Comes First

If there is one thing that you take from this article is that the Government is first in line – before the bank. Thus, the bank does not like lending you money on your home if you have income taxes or property taxes owing. Why? Because if they need to collect their money, the Government is first in line. Whatever is left over is what the bank gets if they are trying to recover their money.

How Will They Know If I Owe?

The bank will often ask for your NOAs (Notices of Assessment) to determine if you owe income taxes or not. They will also ask for a recent property tax statement to show that you are up to date on your property taxes. In fact, they can also ask for proof that your property taxes are up to date during the term of your mortgage. Under some circumstances, the banks will insist on collecting and paying the property taxes for you to prevent any arrears. Generally they do not ask for proof of income taxes during the term or renewal but if you try to change lenders or parameters, they will investigate.

How Can I Get A Mortgage If I Owe Taxes And Can’t Pay Them?

If you are refinancing, some lenders will allow you to use the proceeds of the refinance to bring your property taxes up to date. If you are purchasing a home, you will inevitably need to settle that debt prior to the purchase. You could get an unsecured loan to pay off the arrears and try to qualify with those payments factored into your debt ratios. We can help to arrange that.

So the short answer to the question, can I get a mortgage if I owe taxes is unfortunately, not likely.

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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