Payment Deferral and Modification Options

Several options exist to temporarily lighten your mortgage burden in Quebec. Each has advantages and consequences to understand before making a decision. The goal is to choose the option that best protects your long-term situation while giving you the necessary relief to navigate the difficult period.

Detailed comparison of the four main options

• Full payment deferral (1 to 6 months): no payment during the period. Interest accrues and is capitalized, meaning added to principal. Advantage: complete immédiate relief. Disadvantage: significant hidden cost. On a $300,000 loan at 5%, a 3-month deferral adds about $3,750 to principal, which then generates additional interest for the rest of the amortization.
• Amortization extension: the lender extends the remaining duration of your loan, reducing the monthly payment. Going from 20 to 25 years reduces payment by about 10 to 12%. Advantage: permanent payment reduction. Disadvantage: you pay more interest long-term. Can be reversible at the next renewal.
• Interest-only payments (3 to 12 months): you pay only the interest, without repaying principal. Reduces payment by 40 to 60%. Advantage: substantial immédiate reduction. Disadvantage: your balance does not decrease during this period, effectively extending your amortization.
• Partial payment with catch-up plan: you pay a reduced amount agreed with the lender, and repay the arrears according to a defined schedule once the difficulty has passed. Advantage: maximum flexibility. Disadvantage: requires a realistic repayment plan.

Eligibility conditions and process

1. Payment history: Most lenders require a payment history without recent default. If you already have one or two late payments, options are more limited but still exist. Contact your lender as quickly as possible.
2. Documentation of difficulty: Provide a documented explanation of the cause: termination notice, medical report, separation judgment, or any other proof of the situation causing the difficulty. Lenders are more accommodating when the cause is clearly identified.
3. Plan to resume payments: Present a realistic plan indicating when and how you will resume normal payments. For example: return to work expected in 3 months, Employment Insurance benefits ongoing, active job search.
4. Lender évaluation: The lender evaluates your file and proposes options for which you are eligible. An AMF broker knows each lender's internal policies and maximizes your chances of approval by presenting your file optimally.

Impact on your credit score

A payment deferral officially approved by the lender is generally not reported as a default to credit agencies (Equifax, TransUnion). However, if the lender reports a special arrangement, it may appear in your file. Confirm in writing with your lender how the modification will be reported to agencies. An AMF-certified broker also negotiates this important aspect, as preserving your credit score is essential for your future borrowing capacity.