In Canada, a mortgage lender will give you a higher interest rate for purchase prices over the $1,000,000 mark. Assuming you agree to purchase a home from a seller for $1,200,000, is it legal to agree that you will pay $1,000,000 for the house and have a separate contract to buy a piece of furniture / appliance / other chattel from them for the remaining $200,000? This way you A. secure a lower mortgage rate. and B. pay less on the land transfer tax (tax buyer pays based on home price).
Even if this is legal by the letter of the law:
- What is the likelihood of this working, assuming the seller is in agreement?
- Are there any likely risks / problems one could face upfront or down the road as a result?
- Would the significant difference between purchase price and home value (as assessed by the municipality) raise red flags such as cause the suspicion of money laundering etc?
I'm looking for the community's thoughts before I approach my lawyer on the matter.