Is it better to pay your property taxes with your mortgage payment?

That depends. Some Lenders require you to.  If they don’t require you to, then it depends on you. Do you have the discipline to save $200-300 a month until the tax bill comes? If not, then let the bank pay your property taxes. It will be more convenient for you, and likely less stressful.

However, that convenience will cost you more money in the long run. In the first year on the mortgage, the bank will collect a little bit more than the actual taxes. The bank wants to make sure that they have a cushion built in for the future, should you default on the property taxes.

If you default, any taxes owing to the government are always in first position and take precedence over any outstanding mortgage balance. You must always pay your taxes first or the bank will pay them on your behalf and chase you down to settle the tax bill that you now owe to the bank!

The moral of the history is: if you cannot afford to pay the mortgage payments plus the property tax bill, then you cannot afford the property, it’s that simple. Don’t mess with the tax man!

Be an informed client. Seek professional advise. 

For more information contact your Toronto Mortgage Broker 

at 416-920-9931

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