Looking to Pay Property Tax Arrears in Ontario?

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Falling behind on property taxes can feel overwhelming—but if you’re a homeowner in Ontario, you’re not alone. Whether you're going through financial stress or dealing with other debts, unpaid property taxes can quickly turn into a bigger problem. The good news? If you have equity in your home, you may be able to use it to catch up before things get worse.

What Happens If You Have Unpaid Property Taxes

Every homeowner in Ontario is responsible for paying property taxes to their local municipality. These taxes help fund important services like garbage collection, road maintenance, and public schools. But if those taxes go unpaid, the consequences can add up quickly.

When you miss your tax payments, your city or town adds monthly penalties and interest to the balance. If you’re still behind after a year or two, your home could be placed into tax sale, which means the municipality has the legal right to sell your property to recover the unpaid taxes. This is not an empty threat—many homeowners don’t realize how quickly this process can move once the property is flagged.

At that point, you won’t just owe the original tax balance. You’ll also be on the hook for legal fees, interest, and administrative costs. That’s why acting early is so important.

If you leave your property taxes unpaid:

The city can charge penalties and interest every month (usually around 1.25%)

After 2 years, your home could be listed for tax sale

You risk losing your home if the taxes and penalties aren’t paid

This process can move faster than most people expect, especially if you ignore notices from the city.

Grace Period for Property Taxes in Ontario

In most parts of Ontario, municipalities will wait up to two years before beginning the tax sale process. But this doesn’t mean you should wait to act. Interest and penalties are typically around 1.25% per month, which adds up fast. And if your home enters the tax sale list, legal fees and administrative charges can be added on top.

Waiting too long limits your options. It’s much better to deal with the issue early—especially if you have home equity that can be used to resolve the debt.

Can You Really Lose Your Home in Ontario?

Yes. If your property enters the tax sale process and you still don’t pay, the city has the legal right to sell your home. You’ll get notice, of course—but by that point, it’s often harder to get traditional financing or a loan approved quickly. In many cases, homeowners only take action when it’s almost too late.

That’s why home equity becomes a powerful tool. You don’t have to sell your home or let it be sold for you. Instead, you can use the value you’ve built up in your property to pay the taxes and get back on track.

Can You Refinance to Pay Property Tax Arrears?

If your current mortgage is coming up for renewal, refinancing can be a great way to pay off unpaid property taxes—if you qualify. In a refinance, you replace your current mortgage with a new one that includes a larger amount. That extra money can be used to pay off your property tax debt.

Many banks will decline a refinance if you owe too much in property taxes. Lenders often see unpaid taxes as a red flag—a sign that you haven’t kept up with your homeowner responsibilities. If you’ve missed other payments or your credit has dropped, it becomes even harder to qualify.

So while refinancing is the best option if your mortgage is near maturity and you’re still in good standing, it’s not always possible. That’s where home equity loans come in.

Use Home Equity to Pay Unpaid Property Taxes

If refinancing isn’t an option—or if you don’t want to break your existing mortgage and pay a prepayment penalty—you can still use your equity through a home equity loan or a HELOC (home equity line of credit) in second position.

With a home equity loan, you get a lump sum of money that you repay in fixed monthly payments. This is ideal if you have a specific amount owing in property taxes and want a clear repayment plan.

With a HELOC, you get a flexible line of credit secured against your home. You can draw from it as needed, which is useful if you also want to take care of other costs at the same time.

The best part is that both options let you leave your existing mortgage untouched. These products sit behind your first mortgage, making them more flexible and often faster to arrange.

Use Home Equity to Consolidate Other Debts

When homeowners fall behind on property taxes, they’re often juggling other debts too—like credit cards, personal loans, or overdue utility bills. If that sounds like you, this might be the perfect time to consolidate everything into one new loan using your home equity.

Here’s why that matters: credit cards can carry interest rates over 20%, while a home equity loan might be closer to 8–12% depending on your credit and the lender. By consolidating your debts into one lower-rate loan, you can reduce your monthly payments, simplify your finances, and potentially save thousands of dollars per year in interest.

In one move, you could pay off your property taxes, eliminate other debts, and finally get back on solid financial ground.

Talk to a Mortgage Broker About Your Tax Arrears

If you're behind on property taxes and not sure what to do next, the smartest step is to talk to a mortgage broker. Brokers have access to lenders who specialize in these situations and can walk you through all your options—even if the bank already said no.

They’ll help you:

Understand how much equity you have

Choose between a home equity loan, HELOC, or refinance

Avoid unnecessary penalties or delays

Act fast to stop a tax sale or legal action

Brokers work for you—not the bank. They’re there to help you find a solution that works, no matter what your financial history looks like.

Get a Home Equity Loan for Unpaid Property Taxes

Unpaid property taxes can lead to serious consequences in Ontario—but with the right help, it doesn’t have to end in a tax sale. If you have equity in your home, a home equity loan or HELOC could be the solution you need to catch up, reduce your debts, and avoid losing your property.

Don’t wait until it’s too late. The earlier you act, the more options you’ll have—and the more money you could save in the long run.

Need help? Schedule a free consultation with our team today. We’ll walk you through the process and help you take the next step—without pressure or judgment.