Property Tax Arrears Solutions
Falling behind on property taxes is more common than most homeowners realize, and it rarely happens by choice. A job loss, an illness, or rising costs can leave even careful homeowners with a growing tax bill.
The good news: if you own your home, the equity in it can be used to pay off property tax arrears in full, stop a tax lien, and prevent a municipal tax sale. At LendToday, we specialize in helping Ontario homeowners resolve property tax arrears quickly, even when banks have said no.
What Are Property Tax Arrears?
Property tax arrears are unpaid property taxes owed to your city or municipality. The moment a payment is missed, the balance starts to grow. Municipalities charge penalties and interest on overdue property taxes, and that interest continues to accrue daily until the account is brought back into good standing.
Left unaddressed, a manageable balance can turn into a serious debt with serious consequences, including the loss of your home. Property tax arrears are not a problem that resolves itself, but they are a problem that can be solved, and faster than most homeowners expect.
Common Property Tax Problems We Help Solve
Homeowners come to us at every stage of the process. If any of these sound familiar, there is still time to act:
- Behind on property taxes or facing unpaid property tax bills
- Overdue property taxes that keep growing with monthly interest
- A tax lien registered against your title
- A Tax Arrears Certificate filed by your municipality
- Tax sale notices or a pending municipal tax sale
- A mortgage renewal declined because of property tax debt
What Happens If You Don't Pay Property Taxes in Ontario
Consequences of Falling Behind
Unpaid property taxes affect more than just your tax account. Homeowners with property tax arrears commonly face:
- A denied mortgage renewal. Lenders check property tax status, and arrears can stop your current lender from renewing your mortgage.
- Damage to your credit rating from missed payment obligations.
- A municipal lien registered against your property title.
- A tax sale, where the municipality sells your home to recover the unpaid taxes.
How a Tax Sale Works
A tax sale is the sale of a property by the city or municipality to recover unpaid property taxes. In Ontario, under the Municipal Act, 2001, if property taxes remain unpaid for two years, the municipality can register a Tax Arrears Certificate on title. You then have one year to pay the full cancellation price before the property can be advertised for sale. You can read the official process on the Ontario municipal tax sale procedures page.
Once a Tax Arrears Certificate has been registered with the Land Registry Office, partial payments are no longer accepted. Any partial payment received is returned to the homeowner. From that point, you have a limited window to pay the full balance and cancel the certificate. This is why acting early matters: the further the process advances, the fewer options remain and the more it costs to fix.
How Home Equity Can Pay Off Property Tax Arrears
Your home equity is the difference between what your home is worth and what you owe on any mortgages against it. For most homeowners in arrears, that equity is more than enough to clear the tax debt completely.
Because the financing is secured by your home, approval is based primarily on equity rather than credit score or income. That means homeowners with bad credit, self-employment income, or a past bankruptcy can still qualify for property tax arrears solutions when a bank would turn them away.
How Much Equity Do You Need to Pay Property Tax Arrears?
This is the question most homeowners ask first. The answer depends on three numbers: what your home is worth, what you still owe on it, and how much you owe in arrears. The arrears amount is usually small next to the equity most homeowners have built, which is why this approach works even when the tax bill feels overwhelming.
Most private and alternative lenders look for meaningful remaining equity after the arrears and financing costs are covered, rather than a perfect credit score or verified income. If you have built up equity over the years, you likely have more room to work with than you expect. The fastest way to know for certain is to run the numbers.
Our Property Tax Arrears Solutions
Home Equity Loan
A home equity loan provides a lump sum borrowed against your equity, which can be used to pay off property tax arrears in full and stop the penalties immediately. It sits separate from your existing first mortgage, so your current mortgage stays untouched.
Home Equity Line of Credit (HELOC)
A HELOC gives you a revolving line of credit secured by your home. You can draw what you need to clear the arrears and keep the remaining limit available for future expenses, paying interest only on what you use.
Cash-Out Mortgage Refinancing
With mortgage refinancing, your existing mortgage is replaced with a new, larger one, and the difference is paid to you in cash. This works well if you want to clear property tax arrears and consolidate other debts into a single monthly payment.
Second Mortgage
A second mortgage is registered behind your existing first mortgage and is often the fastest route to funds when time is critical, such as when a Tax Arrears Certificate has already been registered. Approval is driven by equity, not credit.
Reverse Mortgage for Homeowners 55+
A reverse mortgage lets homeowners aged 55 and older convert home equity into tax-free cash with no required monthly payments. The loan is repaid when the home is sold, making it a practical option for retirees on fixed incomes.
Private Mortgage
A private mortgage is funded by private lenders who focus on your home's equity rather than credit score or income documents. When property tax arrears have already led to a lien or a registered certificate, private lending is often the option that can still close in time.
Can You Get Financing for Property Tax Arrears With Bad Credit?
Yes. This is the situation we handle most often. Equity-based financing is approved primarily on the equity in your home, not your credit score, so a low score does not disqualify you the way it would at a bank.
We regularly help homeowners who have been turned away elsewhere, including those dealing with:
- Bad credit or a low credit score from missed payments
- A current or past consumer proposal or bankruptcy
- Self-employment income that is hard to verify on paper
- Lower or irregular income that banks treat as a barrier
- Existing mortgage arrears alongside the tax debt
If your credit took a hit from the same financial pressure that caused the arrears, you are exactly who these solutions are built for. A bad credit mortgage or a self-employed mortgage can clear the arrears and give you room to rebuild.
The Cost of Waiting: Property Tax Arrears Interest vs a Home Equity Loan
Many Ontario municipalities charge 1.25% per month on unpaid property taxes, which works out to about 15% per year. The City of Toronto, for example, applies a 1.25% late payment charge on the first day of default and again on the first of every month the balance stays unpaid. Compared with an equity-based loan at an illustrative 8.50%, the cost of waiting adds up fast. Here is the interest on a $25,000 balance over time:
Waiting three years on a $25,000 property tax arrears balance could cost roughly $4,875 more in interest than an illustrative equity-based loan.
For illustration purposes only. Based on a $25,000 balance with simple interest and no payments made. Municipal penalty and interest rates are set by each municipality and equity-based loan rates vary by lender and qualification. Rates, fees and estimates are subject to change without notice.
A Property Tax Arrears Example
Mark, a homeowner in Oshawa, had fallen behind during a stretch of reduced income. His situation looked like this:
- $14,500 owing in property tax arrears
- $310,000 remaining on his first mortgage
- Home valued at roughly $700,000
With strong equity but a credit score the banks wouldn't touch, Mark used a $25,000 second mortgage to clear the arrears in full. The result: his taxes were paid, the Tax Arrears Certificate was removed from title, and the tax sale was avoided entirely, all without disturbing his low-rate first mortgage.
This is an illustrative example for explanation only and does not represent a specific client. Individual results, rates and approvals vary.
Why Homeowners Choose LendToday
We work where banks won't. Our team specializes in situations traditional lenders avoid: tax arrears, bad credit, bruised income history. We assess your situation on equity and find a path forward.
Personalized guidance. Every homeowner's situation is different. We take the time to understand yours and recommend the solution that actually fits, not the one that's easiest to sell.
A network of trusted lenders. We work with a wide range of lenders to secure competitive rates and terms, even in difficult circumstances.
Speed when it counts. Property tax arrears are time-sensitive. Our streamlined application process is built to get funds approved and advanced as quickly as possible, before the situation escalates.
Why Homeowners Contact LendToday for Property Tax Arrears
- Licensed Ontario mortgage professionals, Tango Financial Mortgage Corporation, FSRA #13691
- Ontario-focused solutions built around provincial tax sale rules
- Access to alternative and private lenders banks cannot offer
- Real experience handling property tax arrears files at every stage
Stop a Tax Sale Before It Starts
Every week that passes adds interest to your balance and moves the municipal process one step closer to a lien or tax sale. The earlier you act, the more options you have and the less it costs to resolve.
Talk to a tax arrears specialist today. We'll review your situation, confirm how much equity you have available, and lay out your options clearly, with no obligation.
Property Tax Arrears FAQs
Does a tax lien mean I will lose my home?
No. A tax lien is serious, but it is not the end of the road. If you act before the municipal process is complete, the arrears can be paid out and the lien removed.
Does interest keep accruing on property tax arrears?
Yes. Interest accrues daily on the outstanding balance until the account is brought into good standing, which is why delaying costs real money.
What is a Tax Arrears Certificate?
It is a formal legal notice your municipality can register on your property title after two years of unpaid taxes under Ontario's Municipal Act, 2001. Once it is registered, you have one year to pay the full cancellation price, and partial payments are no longer accepted.
Can I get a second mortgage with property tax arrears?
Yes. A second mortgage is one of the most common ways to clear arrears, because approval is based on your home equity rather than your credit score. It can often be arranged quickly, even after a certificate has been registered.
Can property tax arrears stop my mortgage renewal?
They can. Lenders check property tax status, and unpaid taxes can lead your current lender to decline a renewal. Clearing the arrears before renewal time protects your ability to keep your existing mortgage.
Will my mortgage lender find out about unpaid property taxes?
Often yes. Most mortgage agreements require taxes to be kept current, and a registered Tax Arrears Certificate notifies everyone with an interest in the property, including your lender. Resolving the arrears early keeps the situation in your control.
Can I refinance my home to pay off my property taxes?
Yes. Refinancing is one of several options. Regardless of your credit score or income, we can explore short and long-term solutions to get you caught up. Speak with one of our mortgage specialists today.
What are my options if I have bad credit?
Equity-based solutions like home equity loans and HELOCs are approved primarily on the equity in your home, not your credit score. Bad credit does not disqualify you.
How fast can I get funds to pay property tax arrears?
Timelines depend on your situation, but equity-based financing can often be arranged in a matter of days, not weeks. If a Tax Arrears Certificate has been registered, tell us immediately so we can prioritize your file.