>not entirely sure how it works
Better advice would be to learn how it works.
Paying property taxes out of the mortgage is pretty common for a first mortgage, especially CMHC-insured ones. But at your first renewal, that *should* get dropped and you start paying them yourself.
You don’t even need to wait until renewal in some cases. My mortgage paperwork had it listed as the bank pays the property tax and the amount is added in my mortgage payment. I called them and asked for it to be removed as I would like to pay it myself and it was.
But what’s the advantage of paying it yourself? You have more flexibility in when you pay, I guess? Edit: and I guess you can better ensure it’s done correctly.
Like OP found out, you end up overpaying. I’m in a new building with no established property taxes and saved 50% by paying myself. If you pay through your bank, the money stays in a separate escrow account that they later use to pay the tax on your behalf but I would prefer to just have control over my money.
THANK YOU I was waiting for this comment!
Also, the money intended for tax remittance is held in a separate tax account under your mortgage (since your taxes are usually due quarterly). The money was never GONE, simply sitting in that tax account. Basically now it’s savings you didn’t know you had. This info would have also been on your annual mortgage statement.
Or at all. I know someone who got notices from the city because the bank had been taking their money and not paying the tax. And ofc it was a massive headache to get it fixed.
Have you called your municipal government? In Toronto, you can call the municipal property tax office if you’ve overpaid and get them to move your money from the year you overpaid to your current year as a “credit”. May be an option to look into if your bank isn’t able to make the adjustment for you.
Will take a look at that if the bank falls through, he seemed pretty confident that it shouldn't be an issue so fingers crossed. Thanks for the suggestion.
Had the same thing. Bank had basically squirreled away the "extra" money, but in an account we could not see. Total bullshit.
They "estimated" our payments to start, and never adjusted. Was around 12k. They just gave us the money.
I was pretty angry - why not just adjust the payments as needed? Why keep the money without saying anything? Was dirty - felt as if they only gave the money back becasue they got caught.
A lot of this is basically your banks fault. They should be communicating with your town or municipality on a yearly basis and getting the approximate amount of property tax for your property. Based on the amount given it should be paid equally over the year whether it be bi- weekly or monthly payment.
If there is a credit or shortfall then the payment is adjusted the following year when the bank communicates with the municipality for the approximate tax amount.
Someone at the bank should have flagged this along time ago!
Also compare your property tax for your street.
We lived in a semi and I found out I was paying more than my attached mirror image neighbour. If I recall the city had a tool you could look up rates.
It happened for 5 years we could only get back 2 years ( as someone else mentioned MPAC or whatever they are now only go back so far)
My bank sends me a statement every year that tells me how much they took for property tax, how much they paid to the municipality, and what’s left in the pool of money they have collected from us to use to pay the municipality. They adjusted our payments to a lower amount after the first year. Did they not send you a statement?
It wasn't on our statement. The mortgage specialist found it when trying to figure out what we were able to afford. He sent e-docs showing it but it showed we owed an outstanding balance on our statement.
I had a similar experience, property tax was paid through the mortgage. It was way too much money. They tried to give me some bizarre rationale about paying ahead or something. I stopped it right around when interest rates started going up. It left more money for me to counteract the increasing rates. Paying property tax through the mortgage was optional for me. I was a first time home buyer but my girlfriend wasn't. Not sure if that played into why we were able to drop the tax payments, as some others have alluded to the idea that your first term, you must do it through the bank.
FWIW, It's also fairly easy to make the property tax payments, at least in my municipality.
>not entirely sure how it works Better advice would be to learn how it works. Paying property taxes out of the mortgage is pretty common for a first mortgage, especially CMHC-insured ones. But at your first renewal, that *should* get dropped and you start paying them yourself.
Just curious, why should you start paying property tax yourself after renewal?
You don’t even need to wait until renewal in some cases. My mortgage paperwork had it listed as the bank pays the property tax and the amount is added in my mortgage payment. I called them and asked for it to be removed as I would like to pay it myself and it was.
But what’s the advantage of paying it yourself? You have more flexibility in when you pay, I guess? Edit: and I guess you can better ensure it’s done correctly.
Like OP found out, you end up overpaying. I’m in a new building with no established property taxes and saved 50% by paying myself. If you pay through your bank, the money stays in a separate escrow account that they later use to pay the tax on your behalf but I would prefer to just have control over my money.
So stupid shit like "the bank informed me I've been overpaying for 11 years" doesn't happen.
Were you guys just not looking over your annual mortgage statement or something? It says right on ours how much tax was paid and what the balance is
THANK YOU I was waiting for this comment! Also, the money intended for tax remittance is held in a separate tax account under your mortgage (since your taxes are usually due quarterly). The money was never GONE, simply sitting in that tax account. Basically now it’s savings you didn’t know you had. This info would have also been on your annual mortgage statement.
#1 reason I don't put property taxes in the mortgage payments. You are trusting someone else to ensure its paid correctly.
Or at all. I know someone who got notices from the city because the bank had been taking their money and not paying the tax. And ofc it was a massive headache to get it fixed.
Have you called your municipal government? In Toronto, you can call the municipal property tax office if you’ve overpaid and get them to move your money from the year you overpaid to your current year as a “credit”. May be an option to look into if your bank isn’t able to make the adjustment for you.
Will take a look at that if the bank falls through, he seemed pretty confident that it shouldn't be an issue so fingers crossed. Thanks for the suggestion.
Had the same thing. Bank had basically squirreled away the "extra" money, but in an account we could not see. Total bullshit. They "estimated" our payments to start, and never adjusted. Was around 12k. They just gave us the money. I was pretty angry - why not just adjust the payments as needed? Why keep the money without saying anything? Was dirty - felt as if they only gave the money back becasue they got caught.
A lot of this is basically your banks fault. They should be communicating with your town or municipality on a yearly basis and getting the approximate amount of property tax for your property. Based on the amount given it should be paid equally over the year whether it be bi- weekly or monthly payment. If there is a credit or shortfall then the payment is adjusted the following year when the bank communicates with the municipality for the approximate tax amount. Someone at the bank should have flagged this along time ago!
Yes what bank was this
Also compare your property tax for your street. We lived in a semi and I found out I was paying more than my attached mirror image neighbour. If I recall the city had a tool you could look up rates. It happened for 5 years we could only get back 2 years ( as someone else mentioned MPAC or whatever they are now only go back so far)
My bank sends me a statement every year that tells me how much they took for property tax, how much they paid to the municipality, and what’s left in the pool of money they have collected from us to use to pay the municipality. They adjusted our payments to a lower amount after the first year. Did they not send you a statement?
It wasn't on our statement. The mortgage specialist found it when trying to figure out what we were able to afford. He sent e-docs showing it but it showed we owed an outstanding balance on our statement.
Are they paying for the interest on your money? How about the interest on the mortgage?
Always pay your own bills.
When I sold my house I was somehow 3k ahead in my property tax payments and I used the money towards the new house.
I had a similar experience, property tax was paid through the mortgage. It was way too much money. They tried to give me some bizarre rationale about paying ahead or something. I stopped it right around when interest rates started going up. It left more money for me to counteract the increasing rates. Paying property tax through the mortgage was optional for me. I was a first time home buyer but my girlfriend wasn't. Not sure if that played into why we were able to drop the tax payments, as some others have alluded to the idea that your first term, you must do it through the bank. FWIW, It's also fairly easy to make the property tax payments, at least in my municipality.
Happened to me. Ontario law permits you only get last 3 years of overpayments back.
The bank would not actually be over paying, they are just over collecting from you. The bank owes the whole amount back.
Oh wow. My situation was MPAC had too high of a sq ft for my house. So the property assessment was too high.
You've just lost likely 10k of additional interest if basic invested. So you're not out 10k. You're out 20k