Mortgage payment deferral 101

A big topic of discussion recently has been mortgages—and more specifically, mortgage deferrals. Many Atlantic Canadians are struggling financially right now and mortgage deferrals are one way to help alleviate some of that immediate financial pressure. But we wanted to help you understand exactly what a mortgage deferral is, how it can help, and whether it really is the best option for you right now.

Of course, this article is not meant to replace one-on-one advice from a trained financial professional. Always make sure you’re in communication with your financial institution to ensure you’re getting the best advice for you.

What is a mortgage deferral?

Essentially, a mortgage deferral is when your mortgage payments are put on hold for a defined period. The payments don’t disappear, they’re just added to the outstanding balance of your mortgage. The deferred payment amount accrues interest just like the principal. Deferring payments may also lengthen the term of your mortgage.

Why would I consider a mortgage deferral?

Deferring mortgage payments can be helpful when you have less money coming in—like during unexpected or temporary job loss or a reduction of your income.

After the deferral period ends, your mortgage payments return to normal and the missed payments, including principal and accumulated interest, must be repaid.

What if a mortgage deferral isn’t right for me?

That’s entirely possible—a mortgage deferral is meant to be a temporary way to help alleviate financial pressure, but it may not be right for everyone.

Mortgage deferrals are for people who really need a break on their mortgage payments to get through. If you’re able to keep making your regular mortgage payments, you absolutely should.

If you’re unsure of whether a mortgage payment deferral is right for you, talk to your lender or mortgage provider—they can help you determine the best course of action.

What if I need help with my mortgage payments, but I haven’t been impacted by COVID-19?

If that’s the case, there are no changes to the payment terms of your mortgage. You can still speak to your lender about financial assistance, but you might be subject to different terms. Always get professional advice and have a conversation to see what your available options are if you’re feeling financial stress.

What are credit unions offering in terms of mortgage deferrals right now?

Credit unions are offering mortgage deferrals of up to six months to eligible members who have been financially impacted by COVID-19. We’ll work with you on a case-by-case basis to find solutions that meet your individual needs.

If you need guidance or support, contact your local credit union to connect with one of our financial experts for all the refreshingly honest advice you need.