What Is a Payment Deferral?

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A payment deferral allows a lender or servicer to push a set number of missed monthly mortgage payments to the end of the loan. The deferred payments can typically be paid back by making one lump sum payment when the loan matures or is otherwise paid off.

There are a few different types of payment deferrals, which are determined by the guidelines set by the owner of the loan. One type of deferral pushes the full amount of the missed monthly payments (principal, interest, taxes and insurance) to the end of the loan. Another type of deferral pushes only the principal and interest portion of the missed payments to the end of the loan. In the second case, if the loan is escrowed, any missed tax and insurance payments are not deferred but arrangements can be made to pay them back over a specified period of time.