What a deferral actually does
A payment deferral allows you to pause your mortgage payments for a set period, usually one to a few months, while your lender adds the missed interest onto your outstanding balance rather than requiring immediate payment.
Who typically qualifies
Lenders generally offer deferrals for genuine hardship situations like job loss, illness, or a major unexpected expense, rather than as a routine option. You'll usually need to explain your situation and show it's temporary.
- Job loss or reduced hours
- Serious illness or medical leave
- Unexpected major expense affecting cash flow
The long term cost
Deferred interest gets added to your mortgage balance, which means you'll pay interest on that interest over the remaining term. It's a useful short term tool, but it does increase the total cost of your mortgage.
Alternatives worth considering first
Before deferring, ask your lender about extending your amortization temporarily, switching to interest-only payments if available, or restructuring your payment schedule, since these can sometimes be less costly long term.
Frequently asked questions
- Does a deferral hurt my credit score?
- If arranged properly with your lender before you miss a payment, it typically does not get reported as a missed payment on your credit file.
- How many times can I defer my mortgage?
- This depends entirely on your lender's policy, but deferrals are generally meant to be used sparingly for genuine hardship rather than repeatedly.
- Will my mortgage renewal be affected by a past deferral?
- It's worth discussing with your broker, since a deferral itself isn't necessarily a red flag but it may prompt questions during renewal underwriting.