PST On Mortgage Default Insurance
If you are required to have Mortgage Default Insurance on your Mortgage (ie. you have a High-Ratio Mortgage) you will need to pay an insurance premium to the insurance provider. This premium is often added to the Mortgage balance on closing. However, certain Provinces charge Provincial Sales Tax (PST) on Mortgage Default Insurance premiums. These taxes cannot be included in your Mortgage balance and need to be paid by you on the Closing Date (included in your Closing Costs).
The provinces that currently require this, and the tax rate they charge, are Ontario (8%), Quebec (9%) and Saskatchewan (6%). So, if you are buying in one of these provinces be sure to factor in that tax as you prepare yourself for closing costs.
About The Author
Don Scott
Don Scott is the founder of a challenger mortgage brokerage that is focused on improving access to mortgages. We can eliminate traditional biases and market restrictions through the use of technology to deliver a mortgage experience focused on the customer. Frankly, getting a mortgage doesn't have to be stressful.
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