While first-time homebuyers are often required by their lender to pay property taxes as part of their mortgage payments, many people continue to pay them like this throughout their time as mortgage holders. Once you’re no longer required to pay taxes with your mortgage, however, it becomes a question of how you feel more comfortable ensuring your property taxes are paid on time.

Property taxes are charged by your municipality and used to generate money for public purposes in your area. They directly fund municipally-run services such as garbage, composting and recycling, road maintenance, snow removal, parks and recreational facilities, libraries, police and fire, transportation and so on. 

Your property taxes are based on a number of factors including your municipality’s budget, the assessed value of your property and its relative value compared to other properties in your area. 

Your property tax bill is mailed near the beginning of each year and the required amount often increases annually.

Deciding how to pay your property taxes

There are two options when it comes to paying your property taxes: 

  • Pay directly to the municipality. This is a choice typically reserved for veteran homeowners who have already owned properties in the past and are, therefore, familiar with paying property taxes. Typically, you have the option of paying on a monthly, quarterly, semi-annually or annual basis. Payment frequency may also be determined by the municipality. You can usually pay your taxes online, in person at your financial institution, or via mail, telephone banking or preauthorized bill payment. 
  • Included with your mortgage payment. In this case, your lender collects property tax payments from you as part of your regular mortgage payments and then pays your property taxes to the municipality on your behalf. 


First-time homebuyers

You lender will often require you to pay property taxes through your mortgage if you’re a first-time homebuyer – particularly if you make less than a 20% down payment – to ensure your property taxes will be paid regularly and on time.

When lenders pay your property taxes to the municipality on your behalf, they simply take your annual property tax amount and divide it by the number of mortgage payments you make each year. This can be a helpful option – particularly for first-time homebuyers – since your lender then takes on the responsibility of paying your property taxes to the municipality. This becomes one less ongoing cost you have to worry about paying yourself.

Have questions about property taxes or your mortgage in general? Answers are a call or email away!