What Happens When You Defer a Mortgage?
To skip a mortgage repayment, homeowners must contact their lender and fill out a loan modification or deferral application. If you decide to defer a mortgage repayment, it’s important to keep three things that happen in mind.
Repayment Doesn’t Disappear
Deferring a mortgage repayment doesn’t mean it goes away. You’re not skipping it either. The lender is simply allowing you to delay it for up to a period of three months. You’re receiving time to regroup your finances. The lender’s goal is to help you get back on track.
Interest Continues to Accrue
As long as any amount of debt is outstanding, even for a business loan, the interest rate clock continues ticking. In some cases, homeowners can pay off the interest accruing during the deferral period. Otherwise, the lender capitalises the additional interest, and the total loan amount increases.
Deferral Shows Up on Your Credit Report
A mortgage deferral doesn’t impact your credit score. Instead, it shows up as a note on your credit report. If another financial institution sees that the repayment is paused, they take it into account.
What Happens If You Defer a Mortgage Conclusion
Mortgages stretch out over 30 years. Every home experiences a month when they defer a mortgage repayment. Homeowners who maintain a relationship with the lender are more likely to receive a waiver or deferment in times of financial hardship. If you request a repayment deferral, keep in mind that it has repercussions on your loan.
Homeowners experiencing financial hardship can contact our Mortgage House loan specialists for more information.