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A mortgage payment deferral is a temporary arrangement, granted at a lender’s discretion, that lets a borrower in genuine financial hardship pause regular mortgage payments for an agreed period. Interest continues to accrue during the deferral and is added to the outstanding balance, so the mortgage costs more overall and may take longer to pay off.
No. A deferral only pauses the requirement to pay — it does not reduce the principal owed or waive interest. Deferred interest is capitalized onto the balance, meaning the borrower ends up paying interest on that interest for the rest of the amortization unless it is repaid separately.
Deferrals are typically arranged case-by-case through the lender’s relief or hardship program, distinct from a lender’s standard skip-a-payment privilege, which is a built-in feature available without a hardship application. Borrowers considering a deferral should ask the lender for the exact cost impact before agreeing.
Discretionary, not automatic: Canadian lenders assess hardship deferral requests individually; there is no standing federal program guaranteeing deferrals outside of extraordinary, publicly announced relief periods.
Balance grows: deferred interest is added to the principal, which can push the mortgage toward negative amortization if the balance rises above its original level.
Credit reporting varies: how a deferral is reported to credit bureaus depends on the lender and the terms of the arrangement — ask before agreeing.
Talk to the lender early: the Financial Consumer Agency of Canada recommends contacting the lender as soon as payment difficulty is anticipated, since options are broader before an account falls into arrears.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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