Last week, Canada’s six biggest banks announced – to the relief of many – that they would start offering homeowners six-month deferrals on mortgage payments. That relief was short-lived. Just days later, stories emerged about frustrated Canadians facing “delays, confusion, and outright denials from the country’s big banks.”

Banks are offering these deferrals on a case-by-case basis. The process and eligibility criteria for deferrals have been quite secretive, with many Canadians characterizing the process as seemingly arbitrary.

On Sunday, the CBC revealed the first concrete details of RBC’s mortgage deferral program. Their source disclosed that “interest accrued from each deferred payment was being added back into the principal balance of the mortgage.”

The bank is effectively increasing its profit to offset any added risk caused by the deferrals. Under this program, Canadians would not only be increasing their debt load, but they would also face higher payments at their next renewal period.

While the details of other big banks are not as clear, both Scotiabank and BMO have also announced that interest will continue to accrue on mortgages during the deferrals. The Canadian Bankers Association, which represents Canada’s big banks, likewise released a statement clarifying that added interest would be incorporated into mortgage payments – either at the end of the deferral period or at the time of the mortgager s’ next renewal.

Peter Gorham, an actuarial expert, suggests that if you are not “desperate for the financial relief”, it would be wise to pass on these deferrals.


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