A mortgage payment deferral lets you pause or reduce your payments for a set period when a temporary hardship, such as a job loss, illness or a family emergency, makes them impossible to keep up. It isn’t free: interest keeps building while you aren’t paying, and it is added to your balance. This page covers how deferrals work, what they cost, how to ask for one and the alternatives to look at first. Other changes during your term are covered in the mortgage renewal and management hub.
How a deferral works
Banks and other federally regulated lenders are expected to offer relief suited to your situation when you are at risk of default and working with them on a solution, and a deferral is one of the options. A payment deferral lets you delay payments for a specific period, usually up to 4 months. The lender avoids charging interest on interest for a limited period where relief causes negative amortization. Relief measures may increase the total cost of the mortgage. The full list of relief measures is on what happens if you miss a mortgage payment.
| Element | What to expect |
|---|---|
| Length | Agreed with your lender, case by case |
| Payments during the deferral | None (a full deferral) or reduced (a partial one) |
| Interest | Keeps building on the full balance |
| The unpaid interest | Added to the balance |
| When payments resume | A higher payment, a longer amortization or a lump sum, depending on what you agree |
| Approval | At the lender’s discretion |
What a deferral costs
A borrower owes $450,000 at 5%, compounded semi-annually, with 20 years of amortization left, and defers six months of payments. Over six months the balance grows by half a year’s interest, so it becomes $450,000 ร (1 + 5% รท 2) = $461,250, which is $11,250 more than before.
| Before the deferral | After it (same 20 years left) | |
|---|---|---|
| Balance | $450,000 | $461,250 |
| Monthly payment | $2,957 | $3,031 |
The payment goes up by about $74 a month. Over the 240 payments left that is about $17,742 in total: the $11,250 of deferred interest plus the interest charged on it until it is repaid.
The longer the deferral and the longer the amortization left, the more the deferred interest costs, because it earns interest of its own until it is paid off.
How payments resume
| Option | What happens |
|---|---|
| A higher payment | The new balance is spread over the same remaining amortization, as in the example |
| A longer amortization | The payment stays about the same and the mortgage takes longer to pay off. The lender may extend your amortization, and is then expected to develop a plan with you to restore the original amortization within a reasonable time. |
| A lump sum | Paying the deferred interest when the deferral ends returns you to your original schedule; check your prepayment privileges |
How to ask for a deferral
- Call your lender’s mortgage team as soon as you know you can’t make the payments, ideally before you miss one.
- Explain what has happened and how long you expect it to last.
- Ask specifically about a deferral and the other relief options.
- Have documents ready: a layoff letter or record of employment, an EI application, a medical note or an insurance claim.
- Agree the length, what happens to the interest and how payments resume.
- Get the agreement in writing before you stop paying.
- Ask how the deferral will be shown to the credit bureaus.
Lenders will usually ask what caused the hardship, how long it should last, what income you still have, whether you could pay the interest only, and how you plan to restart payments. A record of on-time payments and a clear plan help.
Effect on your credit
With an agreement in place, If the lender agrees that you can miss payments as part of the relief, it's expected not to report them to the credit bureaus. A lender considering you later may still ask about it.
Stopping payments without an agreement is different: the missed payments can be reported as late and the lender can move toward enforcement. What happens if you miss a mortgage payment covers the stages, and what hurts your credit score covers how late payments affect your score.
Alternatives to a deferral
| Alternative | How it helps |
|---|---|
| A skip-a-payment option | Some mortgages let you skip a payment under conditions in the contract; the interest is still added to the balance. Check your mortgage agreement or ask your lender |
| A lower payment schedule | Switching from an accelerated schedule to a regular one lowers each payment; see the payment frequency guide |
| Interest-only payments for a while | Costs less than a full deferral because the balance doesn’t grow |
| Savings | An emergency fund can cover a month or two without adding to the mortgage |
| Employment Insurance | EI benefits replace part of your income while you look for work |
| Insurance on the mortgage or your income | Creditor or disability insurance may pay for a period; check your coverage |
| A HELOC | Borrowing against your home to make the payments, at the HELOC’s rate; see the HELOC calculator |
| A longer amortization | Lowers the payment without a pause; see extending your amortization |
If the hardship is a job loss, can I keep my house if I lose my job? covers EI, the order to use your savings in and what to ask your lender.
Deferrals and your next renewal
A deferral leaves you with a higher balance at renewal, and a new lender may ask about it if you switch at renewal. If the deferral was for a documented, temporary hardship, explaining it up front helps. The mortgage renewal guide and switching lenders at renewal cover the process.
The pandemic deferrals
In 2020, Canadian banks offered payment deferrals on a large scale during the COVID-19 pandemic. Those programs have ended; deferrals today are arranged case by case with your lender.
When a deferral fits and when it doesn’t
| Situation | A deferral can fit if… | Look at instead if not |
|---|---|---|
| Job loss | You expect to be working again within the deferral period | Selling or a longer amortization, if the income drop is lasting |
| Illness or injury | You expect to return to work | A disability insurance claim |
| Business disruption | You have a plan to restore income | Talking to a licensed insolvency trustee if other debts are mounting |
| Separation | You need time to restructure your finances | A refinance or sale once the arrangement is settled |
| A lasting affordability problem | A deferral doesn’t fix it | Selling, or refinancing to a longer amortization |
Related pages
Sources
The figures and rules on this page come from these sources, last checked against them between September 29, 2026 and October 2, 2026. How we check facts.
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Conventional 5-year mortgage rate (data series)
- Bank of Canada: Data table
- Financial Consumer Agency of Canada: Mortgage relief options
- Financial Consumer Agency of Canada: Paying your mortgage when experiencing financial difficulties