Anyone pay their property taxes with their mortgage through bank?

[89fan]

My property taxes are $2,696

My mortgage is bi-weekly.
At that time they take out $122.42 for property taxes also.

Now I calculated $3,182.92. So why are they taking out more then they need to?

They also told me that since this is our first mortgage they are required to take out and pay the property taxes on our behalf. Is this true?

Thanks to anyone that can explain this to me.

[gman]

My property taxes are $2,696

My mortgage is bi-weekly.
At that time they take out $122.42 for property taxes also.

Now I calculated $3,182.92. So why are they taking out more then they need to?

They also told me that since this is our first mortgage they are required to take out and pay the property taxes on our behalf. Is this true?

Thanks to anyone that can explain this to me.

I don't do that but it seems many people here do.
As far as I can tell, what you described is normal.
I choose to pay the property tax myself so that it would be clear to me what actually happens.

[Grassgreen]

Are you paying them some mystery service charge? Did your property tax go up without you realizing it?

You are certainly not obligated to use the bank to pay this unless you agreed to it as a condition of your mortgage...I am sure city hall would prefer that you give them a check instead.

[Krox]

You don't have to pay your property taxes thru' the bank. Most cities have a system where you can pay monthly, or even quarterly.

The bank always makes you pay more for property tax. This is so they have a reserve. It is still your money and they don't charge service charge but they make interest of your money not you. They do this since most cities take their property tax every quarter. If they didn't have a reserve, the bank would have to shell out the money in the beginning of the quarter and then you woul pay that back over the next three months. Essentially they would be giving you an interest free loan which we know banks don't do. So they charge you more so you always have a surplus of money in your tax account.

I wouldn't recommend letting the bank pay your property tax.

[oeketer]

My property taxes are $2,696

My mortgage is bi-weekly.
At that time they take out $122.42 for property taxes also.

Now I calculated $3,182.92. So why are they taking out more then they need to?

They also told me that since this is our first mortgage they are required to take out and pay the property taxes on our behalf. Is this true?

Thanks to anyone that can explain this to me.

the money that you pay bi-weekly for your taxes goes into a tax account under your mtg. It accumulates and then the bank makes your property tax payments (usually 3 times a year in most cities). When we set up the property tax portions, we take your annual tax divde by 12, then usually add $50-100 per month depending on the banker. This is to account for an increase in your annual property taxes this way your tax account is over paid rather than being over drawn in which case the bank will ask you for an additional payment to cover the over drawn tax account. If your tax account remains over paid after your taxes for the year have been paid, then the balance stays in the tax account and is applied for the following year.

[brunes]

If you have the ability to budget to do so then pay the tax yourself, do not do it through the mortgage. It offers no benefit to you at all to essentially give the bank a interest-free loan of your own money. Instead take the money the bank WOULD have taken out and put it aside in a high interest savings account, so YOU get paid for saving instead of them.

And the whole "you have to do this since it is your first mortgage" thing is baloney, at least in general. I am with PCF, and when I bought this house, my first house - I was only 23, and certainly had never before had a mortgage, and I pay my own property taxes directly to the city annually.

Also as a bonus here with SNB we can charge them to debit so I get air miles with my debit when I pay - would not get that if the bank paid them!

[rockbottom]

My property taxes are $2,696

My mortgage is bi-weekly.
At that time they take out $122.42 for property taxes also.

Now I calculated $3,182.92. So why are they taking out more then they need to?

They also told me that since this is our first mortgage they are required to take out and pay the property taxes on our behalf. Is this true?

Thanks to anyone that can explain this to me.


My first mortg. with TD, I had to pay PT with my mortg.payments. I didn't question at the time, and pretty much thought that was the normal procedure and went along with it. The PT payments were deposited into a separate tax account; and yes, the initial amount was more than the monthly I should have been paying but later adjusted once my exact tax bill started rolling in. This was a VRM. (I am not sure if this had something to do with it!). I currently have renewed my mortgage to a fixed rate and paying the tax bill myself.

[realinvestor101]

If you have a high ratio mortgage i.e. Loan to Value ratio greater than 75%, the banks generally deducts the money from your bi-weekly payment. This goes to a separate suspense account which gets adjusted at the end of the year.

This is to protect the bank of foreclosure due to non-payment. In order of priority taxes comes first then mortgage.

If your ratio is below 75% you can tell the bank that you want to pay directly and they would be generally ok with it.

[grant]

They also told me that since this is our first mortgage they are required to take out and pay the property taxes on our behalf. Is this true?
It may be true, but it's BANK policy, not any kind of law.

Personally i would never take any mortgage that had that as a condition.

[Thalo]

The actual rule on PT paid thru mortgage is that all high ratio insured mortgages need to have property taxes paid thru the mortgage. I believe CMHC puts this requirement on the banks, to reduce their risk. Any time a PT payment is missed, the city will go to the banks first and the banks will pay the PT (rather than having the city put a higher ranking lien against the property) out of the reserve, if there is one. If not, you can pay the bank back later.

[89fan]

Thanks for the feedback.
I am still not happy about it. But what can I do.
Our mortgage is high ratio isured by GE, fixed rate.

It's not like my pt are going up 20%, so I see no reason for them to keep so much.

After my 5 years we will definitely not be paying our taxes through the bank.

[brunes]

The actual rule on PT paid thru mortgage is that all high ratio insured mortgages need to have property taxes paid thru the mortgage. I believe CMHC puts this requirement on the banks, to reduce their risk. Any time a PT payment is missed, the city will go to the banks first and the banks will pay the PT (rather than having the city put a higher ranking lien against the property) out of the reserve, if there is one. If not, you can pay the bank back later.

Once again, this is false. CMHC does NOT require this. I have a 95% loan to value CMHC insured mortgage, was only 23, had only worked at my job for only 8 months, and certainly never was any need to pay my property tax to the bank iterated to me. The mortgage specialist, asked me if I wanted to do so, I declined, end of story.

This was in 2003. Maybe rules have changed drastically since then but I doubt it. No mention of it on the requirements section of the CMHC website either ( http://www.cmhc.ca/en/co/moloin/moloin_003.cfm).

IMO this is whatever bank you are with pulling a fast one on you if they tell you this is a requirement by law. Try shopping around at another bank, I wouldn't want to deal with any bank who lies to me.

[Crowbarfoot]

Yup, they do not require it as far as I know.

Some banks have a min credit score requirement to allow you to pay the PT yourself but thats an in house policy.






Once again, this is false. CMHC does NOT require this. I have a 95% loan to value CMHC insured mortgage, was only 23, had only worked at my job for only 8 months, and certainly never was any need to pay my property tax to the bank iterated to me. The mortgage specialist, asked me if I wanted to do so, I declined, end of story.

This was in 2003. Maybe rules have changed drastically since then but I doubt it. No mention of it on the requirements section of the CMHC website either ( http://www.cmhc.ca/en/co/moloin/moloin_003.cfm).

IMO this is whatever bank you are with pulling a fast one on you if they tell you this is a requirement by law. Try shopping around at another bank, I wouldn't want to deal with any bank who lies to me.

[VelociRacer]

Our mortgage with BMO (first house, 87% loan to value CMHC insured mortgage) started with a BMO-managed PT account. After one year, I saw how mis-managed my PT account was, with alot of clerical errors. After sorting out the errors, I demanded that it be closed and now we pay the town directly 3x a year. Bank-managed PT accounts are not worth the hassle. You should insist to manage your own PT account with your locality and you will have piece of mind. It certainly is your right.

[patrob]

I don't do that but it seems many people here do.

I choose to pay the property tax myself so that it would be clear to me what actually happens.

Same here...since our first mortgage payment back in 1999, we had always paid the taxes ourselves. I guess I like to be in control of my finances ;)

[grant]

The actual rule on PT paid thru mortgage is that all high ratio insured mortgages need to have property taxes paid thru the mortgage. I believe CMHC puts this requirement on the banks, to reduce their risk.
You believe incorrectly; there is no CMHC or legal requirement of this kind.

Anyone telling you different is snowing you.

[Thalo]

Hmmm... the policies of the bank that I work at tell me that it is a requirement. Maybe it's not a CMHC requirement, but I don't understand why the bank would care, seeing as it's CMHC that takes the default risk.

[grant]

Hmmm... the policies of the bank that I work at tell me that it is a requirement. Maybe it's not a CMHC requirement, but I don't understand why the bank would care, seeing as it's CMHC that takes the default risk.
Maybe, as pointed out, the bank wants to increase its float by holding all those monthly payments interest-free during the year?

Or maybe it's a silly policy that is entrenched by bureaucracy?

Regardless, you end up with it being enforced on a bunch of customers who naively believe it's "the law" that they have to comply.

[brew99]

Maybe, as pointed out, the bank wants to increase its float by holding all those monthly payments interest-free during the year?

Or maybe it's a silly policy that is entrenched by bureaucracy?

Regardless, you end up with it being enforced on a bunch of customers who naively believe it's "the law" that they have to comply.

I would have to agree with grant!

The banks love interest-free money....why should you make 4% on it when the banks can do it (and pocket that money)!!!!

I'm sure it is marketed as a service to those who are not comfortable saving for their PT themselves..........the thing is people are naive, and will go along with what the so called "expert" tells them.

[Thalo]

Myself, I would never pay my property taxes through my mortgage if I can avoid it.

Now that I think of it (and it has been a while since I actually did mortgages regularly) we do have an exception, that you can get out of having to pay PT through the mortgages with proof of being set up for pre-authorized monthly payments to the city. What I know for sure is that there is a more stringent requirement on those taxes being paid some way if it is a high ratio mortgage. We would never sign up a customer to a CMHC insured mortgage and say "sure... you just go and pay those taxes any way and whenever you please, we trust you."

[89fan]

Myself, I would never pay my property taxes through my mortgage if I can avoid it.

Now that I think of it (and it has been a while since I actually did mortgages regularly) we do have an exception, that you can get out of having to pay PT through the mortgages with proof of being set up for pre-authorized monthly payments to the city. What I know for sure is that there is a more stringent requirement on those taxes being paid some way if it is a high ratio mortgage. We would never sign up a customer to a CMHC insured mortgage and say "sure... you just go and pay those taxes any way and whenever you please, we trust you."


Just out of curiosity which bank do you work at 9 (Name opr Colour)?
I have e-mailed the banker letting them know that we wish to pay our own property taxes. So I am awaiting their response.

I asked everyone I work with and only 1 person pays their pt through the bank, everyone else pays it themselves.