For many B.C. homeowners, particularly seniors living on a fixed income, property tax deferment has been a way to keep monthly expenses manageable while remaining in their homes.
That program is about to become considerably more expensive.
The Province of British Columbia has announced changes to the interest charged under its Property Tax Deferment Program. The rate will increase from prime minus 2% to prime plus 2%.
With the prime rate currently at 4.45%, that would put the deferment rate at 6.45%.
There is another significant change: deferred balances will move from simple interest to compound interest. This means interest can accumulate on previously charged interest, increasing the amount owed over time.
What is the B.C. Property Tax Deferment Program?
The program allows eligible B.C. homeowners to defer payment of their annual property taxes. The provincial government pays the taxes to the municipality on the homeowner’s behalf, and the deferred balance is generally repaid when the property is sold or the homeowner chooses to repay it.
It has been particularly useful for homeowners aged 55 and older who have substantial equity in their homes but limited available income. More info here.
What Homeowners Should Consider
For someone who has used property tax deferment for several years, the combination of a higher interest rate and compounding can make a meaningful difference to the balance eventually owed.
Homeowners currently using the program — or considering applying — should review the updated cost and how it fits with their broader financial and mortgage plans.
If you have substantial equity in your home, there may also be other financing options worth comparing before deciding how to manage upcoming property taxes.
Get In Touch
Have questions about using your home equity or how these changes could affect your financial options? Talk to us. With over 50 years of combined experience, we are here to help you navigate the mortgage landscape. Connect with a 4Front broker today.