Using Home Equity To Pay Back Taxes
You may be surprised if you’re wondering whether you can use your home equity to pay taxes. The answer is yes, you can. If you have good credit and some equity in your home, then you can use that to pay back your taxes. However, doing so is no easy task, and if you are not aware of the procedure, you will probably encounter multiple problems.
As an expert in the field, Rowan Smith Mortgage Broker - City Wide Mortgage Services has written down how you can use your home equity to pay back your taxes and ways to avoid pitfalls.
1. Banks won’t allow them to consolidate their existing mortgage
Many banks consider income tax arrears a form of “default.” Even though a client may qualify for the amount required to consolidate their existing mortgage and the taxes, the banks often won’t allow them to do so.
We, however, don’t have any issues consolidating a first and second mortgage. So, if a person owes taxes (GST, Income Tax, etc.), we can register a second mortgage on the title to release enough equity to pay off the taxes. Then, we can go back to the bank and ask them to consolidate everything into one larger new first mortgage without the stigma of having to pay back the taxes you owe.
2. No or low amount of work during the pandemic
Often the reason someone has owed taxes they haven’t paid is because they have not been going to work (possibly due to the pandemic) or earned less than typical. Sometimes, even if they’re back working, they still owe some taxes due to the lower amount of work in the past, and they can’t get the equity out of the home to pay off the taxes or debts. Our second mortgage program doesn’t look at income. It looks purely at the equity in the home. So, if they’re borrowing against the home and have substantial equity, they won’t need to verify their income and ability to pay the loan. The loan will be based purely on their equity position in the property. The higher the percentage of the home financed, however, will result in different rates.
If you’re looking for a mortgage broker in Vancouver, BC, reach out to me at Rowan Smith Mortgage Broker - City Wide Mortgage Services. As the best mortgage broker In Vancouver, BC, I focus on getting my clients the best rate, terms, and product that suits their unique financial position. As an independent broker, I have access to far more lenders than the average client is even aware of. I can ensure that whatever lender we place your mortgage with, the strategy we set up for you is optimal for the long term, not the short term. I offer services like home purchase mortgage, mortgage pre-approval, mortgage renewal/refinance, construction mortgage, private lending, equity mortgage, debt consolidation, and self-employed mortgage. I offer my services to clients across Vancouver, Yaletown, Burnaby, Richmond, Coquitlam, Surrey, South Surrey, White Rock, Langley City, Fort Langley, Langley Township, Aldergrove, Abbotsford, Chilliwack, Hope, and the surrounding areas.
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