Definition
Deferment
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Mortgage deferment refers to the delay of required debt payments as agreed by both borrower and lender.
In other words, the requirement of the debt obligation to be repaid according to the payment schedule is deferred to a later date. Leaving a gap in the amortization schedule.
This obviously would at least result in the extension of the loan tenure.
Deferment of home loans became available in Singapore in efforts to minimize the adverse financial impact on the daily lives of Singapore residents during the COVID 19 outbreak.
The active period is from April 2020 to December 2020.
Borrowers who apply for them and gets accepted would not suffer from bad credit records at the credit bureau.
However, there is no standard structure to how deferred housing loans would be managed by borrowers.
This means that different banks would determine their own processes on how their deferral system works.
A bank might just approve a time delayed hold on debt obligations and resume the same payment plan without any changes. From a consumer standpoint, this would be the most beneficial.
Another bank might approve the deferral but continue to charge the interest on the home loan, accounting the accumulated interest as deferred interest and added to the principal.
A third bank might not require borrowers to repay the full monthly mortgage payment but only requiring that borrowers continue to service the payment of the interest portion.
Some might only allow one to defer the installment payments for citizens and PR, while others might not have such restrictions.
Another might set a standard set of instructions to all borrowers with no flexibility on customization.
If you are interested in applying for home loan deferment, it is best that you check with your mortgage lender to see what are their terms regarding the matter. Don’t assume what you read in the media applies to you.
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