It’s a harsh reality that COVID-19 has left many people facing significant financial hardship. In an effort to alleviate some of this burden, the government is working at all levels to provide relief measures to assist those who are most vulnerable. 


Many Canadians have been laid off or had their wages reduced and are now wondering how they’ll make their monthly payments. For homeowners anxious about meeting their mortgage obligations, help is available through the COVID-19 Mortgage Payment Deferral program. 


A mortgage deferral – also known as a ‘mortgage payment deferral agreement’ or ‘mortgage forbearance agreement’ – means that you’re not required to make your monthly mortgage payments for a set period of time. The government has currently established a deferral program of six months. 


Note: The six-month deferment applies to Canada’s six largest banks, but the deferral period may be less for some of the smaller, non-bank lenders. 


A deferral is a temporary measure and applies to both the interest and principal of the mortgage, but has no bearing on other house-related payments such as property taxes or insurance. After the agreement ends, your mortgage payments return to normal and the ‘missed’ or deferred payments (interest and principal) will be added to the balance of your mortgage.


Common misconceptions

As indicated above, a deferral is not a payment pardon but, rather, a payment postponement. The money you defer now will not simply disappear but, instead, will be added to your outstanding mortgage balance. Repayment details should be discussed with your lender at the time of your application and will be outlined in your agreement. 


If you’re currently employed and are able to pay your mortgage, you must continue to do so. This program is not designed for those who have the means to maintain their monthly payments. 


How do I apply? 

Deferrals are granted on a case-by-case basis, so it’s best to consult your lender to determine whether you qualify. Most customers whose mortgage is currently in good standing should be eligible, but you may be required to provide proof that you’ve been negatively impacted by the virus. 


Not surprisingly, financial institutions are receiving high call volumes during this time, so you’re encouraged to visit your lender’s website as a first step to learn about the latest information on their payment deferral process. You may also want to contact your mortgage agent for additional guidance and advice.


Additional Resources

Government initiatives such as mortgage payment deferrals are designed to support economic and financial stability while providing flexibility and some peace of mind to Canadian homeowners. In addition to the resources from your financial institution, useful information can be found at the following links. Check back often for updates:

CMHC – Understanding Mortgage Payment Deferrals
Government of Canada Economic Response Plan


Have questions about your mortgage or cash flow options? Answers are a call or email away!