Mortgage Deferrals Q&A

How does a mortgage payment deferral work?
A mortgage deferral is when scheduled payments are postponed for a specific period of time.  The interest due on the deferred payment is added to the outstanding balance of your mortgage.  Interest will continue to accrue.

For example, a $20,000 payment deferral for a three-month period could result in a new balance owing of $20,250 (at 5% interest) at the end of the agreement.  (This is for illustration purposes only.  Contact your credit union to discuss your specific financial situation).

When should I consider a mortgage deferral?

Mortgage payment deferrals can help you during times of financial hardship—like unemployment or reduced employment due to the COVID-19 pandemic. 

If I qualify for mortgage deferral are the deferred payments “forgiven” or added to my mortgage balance?

The payments that are deferred are added to the outstanding balance and will accrue interest. Following the payment deferral period, the credit union may adjust the mortgage payment to reflect the increased outstanding mortgage amount at the end of the payment deferral period, or at renewal of the interest rate term.

How many payments can I defer?

Eligible borrowers who have been impacted by COVID-19 can defer payments up to six months. The request to defer a payment must be received prior to June 30, 2020.

Who qualifies for a mortgage payment deferral?
Credit unions and other banks determine eligibility on a case-by-case basis.  A mortgage payment deferral should be considered only if a borrower is unable to continue to meet their financial obligations as a result of COVID-19.  If you can continue making mortgage payments, you should.  

Is mortgage payment deferral a good option for borrowers?

The mortgage deferral program being offered by credit unions and other banks is to provide short-term financial relief to borrowers who have been impacted by COVID-19.  It should be considered as an option only if you are unable to make your regular monthly mortgage payments.  If you can continue to pay your mortgage, you should. 

If you are uncertain whether this is the right option for you, please speak with your financial adviser to find the best solution to meet your specific needs.

Do I still have to pay my property taxes and life/disability premiums?

Yes. Only the principal and interest portion of the mortgage payment can be deferred.

Do I qualify if I have previously deferred payments (not related to COVID-19)?

Yes. Regardless if payments were deferred due to other circumstances, the lender may apply up to six additional months of deferred payments for eligible borrowers impacted by COVID-19.

Is there a limit on the number of homeowners that insurers will assist?

No. Mortgage insurers have committed to assisting all homeowners impacted by COVID-19.

What if I need assistance but it is not COVID -19 related?

There are other default management options available to those who require assistance unrelated to COVID-19.  Contact your financial advisor to discuss the right solution to meet your specific financial needs.

If payment deferral causes my mortgage to exceed the original balance will I still qualify?

Yes.  The total outstanding balance can exceed the original balance.

Can I extend my amortization to lower my payment rather than deferring payments?

Extending an amortization is an assistance option, however; the lender must contact the insurer for an assessment and approval.  Lenders are encouraged to apply the six-month deferred payments as the primary tool for homeowners impacted by COVID-19.