Mortgage payment deferrals allow Ontario homeowners to temporarily pause or reduce their payments due to financial hardship temporarily. It’s not loan forgiveness—interest continues to accrue, and the deferred amount is added to the total mortgage balance. Understanding how deferrals work can help you avoid long-term financial stress and protect your credit.
What Are Mortgage Payment Deferrals?
Definition and Purpose
Mortgage payment deferrals are a temporary relief option offered by lenders to homeowners facing financial challenges. This option allows you to pause your mortgage payments for a specific period, typically one to six months, without being marked as delinquent.
Key takeaway: A deferral delays your mortgage payments, but it does not erase them. You’ll still owe the deferred payments, plus interest, later.
When Can You Request a Mortgage Deferral in Ontario?
Qualifying Situations
Homeowners may be eligible to request a deferral if they are facing:
- Job loss or temporary layoff
- Reduced income or business downturn (prevalent among self-employed individuals)
- Illness or injury impacting income
- Family emergencies
- Natural disasters or emergencies (e.g., COVID-19 pandemic programs)
Each lender has different eligibility criteria, so it’s important to speak directly with them.
Important to note: Lender approval is required, and a deferral is not guaranteed.
How Mortgage Payment Deferrals Work
Process Overview
- Contact your lender and explain your financial situation.
- Submit documentation such as proof of income reduction, job loss, or medical issues.
- Lender evaluates your request based on their internal policy.
- If approved, you’ll enter into a deferral agreement that outlines the term and repayment terms.
What Happens During the Deferral Period
- Monthly payments are temporarily paused.
- Interest still accrues on the unpaid balance.
- Deferred interest is added to your overall mortgage.
- Your amortization may be extended to accommodate the balance.
Common mistake: Believing that the mortgage balance remains unchanged. It increases due to interest.
Costs and Impacts of Deferring Your Mortgage
Interest Accumulation and Long-Term Cost
Deferring payments increases your mortgage balance. For example, deferring a $2,000 monthly payment for six months at a 5% interest rate could result in $1,000–$2,000 in extra interest.
That additional interest is either paid as a lump sum later or spread out over the life of the loan.
Credit Score Impact
Most lenders report deferred payments as current, not missed. However, if you stop paying without a formal agreement, your credit will suffer.
Common myth: All deferrals damage your credit. This is false if it’s approved by the lender.
Skip a Payment vs. Mortgage Deferral
| Feature | Skip a Payment | Mortgage Payment Deferral |
|---|---|---|
| Approval Needed | Often pre-approved | Requires a lender application |
| Duration | Typically 1 month | 1 to 6 months or more |
| Interest Accumulation | Yes | Yes |
| Credit Impact | None if done properly | None if the lender reports correctly |
| Best Used For | Short-term cash gap | Extended hardship |
Key takeaway: While both delay payments, deferrals are for more serious and longer-term financial issues.
Pros and Cons of Deferring Your Mortgage
✅ Pros:
- Temporary financial relief
- Avoids delinquency and foreclosure
- Protects credit score with lender approval
❌ Cons:
- Adds interest to balance
- Increases total repayment
- May delay mortgage-free timeline
How to Apply for a Mortgage Deferral in Ontario
Step-by-Step Process
- Review your lender’s policy on deferrals.
- Contact your mortgage provider as soon as you anticipate trouble.
- Provide documentation: job layoff notice, reduced pay slips, medical documents.
- Negotiate and sign the deferral agreement.
- Follow up to ensure everything is processed and recorded correctly.
Alternatives to Mortgage Deferral
| Product | Description | Key Benefits |
| Refinancing | Replace your current mortgage with a new one, typically at a lower rate or longer term. | – Lower monthly payments- Potentially better rate- Good for long-term solutions |
| HELOC (Home Equity Line of Credit) | Revolving line of credit based on your home’s equity. Access funds as needed. | – Flexible borrowing- Interest-only payments- Reuse credit as it’s repaid |
| Second Mortgage / Private Financing | Lump-sum loan secured by home equity, often from private lenders. | – Quick access to funds- More lenient credit requirements- Short-term cash solution |
Important to note: Compare total costs—interest, fees, legal costs—before choosing this path.
What to Do After the Deferral Period Ends
Repayment Strategies
- Resume regular payments on time.
- Consider making a lump sum payment toward the deferred balance.
- Speak to your lender about repayment options if your situation hasn’t improved.
Common mistake: Assuming your lender will restructure automatically—you need to initiate this conversation.
Mortgage Payment Deferrals in Summary
Being proactive is crucial when it comes to mortgage payment deferrals. The moment you anticipate financial hardship, it’s best to contact your mortgage lender before any payments are missed. Lenders are more willing to work with borrowers who communicate early and clearly. Letting them know your circumstances helps prevent misunderstandings, protects your credit, and avoids the stress of legal consequences down the road.
Mortgage payment deferrals are a short-term tool, not a long-term solution. Once the deferral period ends, it’s important to have a plan in place for resuming payments and catching up. Whether you refinance, explore other equity options, or adjust your budget, acting early gives you more control. Don’t wait until the situation worsens, loop in your mortgage advisor or lender and work together on a sustainable path forward.
FAQ Section
Q1: Can anyone in Ontario request a mortgage payment deferral?
A: No. Homeowners must demonstrate valid financial hardship, and approval depends on the lender’s policies.
Q2: Will deferring my mortgage affect my credit score?
A: If your lender approves the deferral and reports it correctly, your credit score should not be affected.
Q3: How long can I defer my mortgage in Ontario?
A: Most lenders allow deferrals anywhere from 1 month to 6 months, but it depends on your financial situation and lender policies.
Q4: Can I defer payments on a second mortgage?
A: Yes, but only if the second mortgage lender allows it. Private lenders may have stricter conditions.
Q5: Do I need to repay the deferred amount all at once?
A: Usually not. Lenders typically spread the deferred payments across future installments or extend your amortization by adding the interest portion to the balance.
Mortgage Payment Deferrals: Learn More
- How Soon Can You Lose Your House in Canada? The Truth About Foreclosure - July 14, 2025
- Title Insurance: Proven Homeowner Protection in 2025 - July 8, 2025
- ID Requirements for a Mortgage in Ontario: What You Need to Know - July 2, 2025
