Tax Time: Use a Second Mortgage to Pay Off the CRA

Tax Time: Use a Second Mortgage to Pay Off the CRA. Jason Scott, Edmonton Mortgage Broker

Tax Time: Use a Second Mortgage to Pay Off the CRA

It’s close to tax time and hopefully you don’t have a bill from the CRA. But in case you do, here’s how you pay off the CRA using a second mortgage!

There are two certainties in life death and taxes I’m not sure which of those two are scarier—maybe taxes!

I’ve talked before about private mortgages and second mortgages. One scenario where you might want to get a second mortgage is if you owe money to CRA. When you’re self-employed, it’s really easy to fall behind on your bookkeeping and your tax filings, etc., and you can probably get away with it for a little while. But eventually, the CRA will catch up to you and they carry a really big stick.

So you have to pay those guys off, and traditional lenders aren’t going to be very keen to lend you money from a mortgage to pay CRA off. But private lenders will

Here’s what you could do. First, you get a second mortgage, assuming you have enough equity in your home. Let’s say you owe $30,000 to the CRA—which, believe it or not, is not too hard to rack up. Then you get the money as equity out of the house and you pay off CRA.

Now, a second mortgage is pretty expensive. They’re 12%-15% plus lender fees, legal fees, etc. This means it’s got to be a reasonable amount of money to make it worthwhile. You don’t want to be in a private mortgage for a long time, so after you get the second mortgage to pay off your taxes, you’d ideally be in a position where you can refinance. You’d refinance the first mortgage and the second mortgage into a brand new first mortgage and you can go on your way. The CRA is off your case and you’ve got a better interest rate—and if you need a referral to an accountant I’ll do that for you too! Life will be good.

If you have questions on that um give me a call!

I also have a helpful video about why you should get a second opinion before renewing your mortgage.

About Jason Scott, Edmonton Mortgage Broker

Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker Edmonton.

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