The Rent or Mortgage Payment Deferral Bill
In addition to the CERB, the pandemic also caused many landlords and lenders to offer rent or mortgage payment deferrals. However, these deferrals are not about giving you money now, but putting off your housing bills to later.
Deferred Rent Payments
If you deferred your rent payments, then you may have signed an agreement with your landlord that would have outlined the exact details of that deferral. For example, the agreement might say that at the end of the deferral period, you’ll have to pay regular rent plus part of the deferred rent every month; you would do this until you paid all the deferred rent. In some provinces, the government laid out how repayment of missed rent can take place. Make sure you understand the details of your own agreement. If it seems like you’ll have problems paying back your deferred rent, then talk to your landlord as soon as possible so that you can both work on a solution.
Deferred Mortgage Payments
If you deferred your mortgage payments, then things look a little different. That’s because a payment deferral only defers the principal, not the interest. If you’re making partial payments to cover the interest on the mortgage, then you’ll simply carry on making the same payments as you were before. Your balance will not have decreased during the time you deferred the principal payments, but you at least had some breathing room in your budget.
However, if you haven’t been making any payments on your mortgage, then the interest costs will have built up during the deferral time and things can get a bit more complicated. When your deferral period ends, that built up interest will be added to the principal of your mortgage balance that is still owing. This means you’ll pay interest on your deferred interest for the rest of your mortgage amortization; your payments might even increase during the current term of your mortgage because your principal amount has increased. To avoid this added expense, ask your lender what the total deferred interest amount will be. If you can, pay as much of that amount back as soon as your deferral ends. Be sure to reach out to your lender if you plan to do this. They will need to ensure that the lump sum payment goes towards the accrued interest and not just against the principal.