If you cannot make your mortgage repayments, contact your lender’s hardship team before you miss a payment and ask for a hardship arrangement. Under the National Credit Code the lender must respond to a hardship notice, generally within 21 days; common outcomes are reduced or paused repayments, a temporary switch to interest-only, or a longer term.

If the lender refuses, the Australian Financial Complaints Authority (AFCA) can review it for free, and the National Debt Helpline on 1800 007 007 connects you with a free financial counsellor.

Why act before you miss a payment?

The earlier you raise it, the more options you have. A borrower who calls while still up to date can usually negotiate a short-term arrangement. A borrower three months in arrears is dealing with collections, default notices and fewer choices. If you can see trouble coming, such as a job loss, illness, a separation or a rate rise you cannot absorb, call now.

How do you ask for hardship help?

  1. Contact the hardship team, not general customer service. Most lenders list a hardship phone line and an online form.
  2. Explain the change: what happened, when, and whether it is temporary or permanent.
  3. Say what you can pay. A realistic budget showing what you can afford each month makes the conversation practical.
  4. Provide evidence when asked, such as a termination letter, medical certificate or bank statements.
  5. Get the arrangement in writing, including how long it lasts and what happens to the missed or reduced amounts afterwards.

What are the lender’s obligations?

Under the National Credit Code, once a lender receives a hardship notice it must respond. If it has enough information, it generally has 21 days to tell you its decision; if it needs more information it can ask for it, and the timeframe runs from when you provide it. A lender that refuses must give reasons in writing and tell you that you can take the matter to AFCA. ASIC has taken action against lenders that failed to respond to hardship notices on time.

What options do lenders offer?

Common hardship arrangements
Option How it works The trade-off
Repayment pause Repayments stop for a short agreed period Interest usually keeps accruing and is added to the loan
Reduced repayments You pay a smaller agreed amount for a period The shortfall is added to the loan or repaid later
Interest-only for a period You pay interest but no principal The loan balance does not fall in that time
Longer loan term The remaining term is extended Lower repayments, more interest overall
Capitalising arrears Missed amounts are added to the balance Brings the loan up to date, increases the debt

Will hardship affect my credit report?

Yes, for 12 months: a hardship arrangement can appear as financial hardship information, without the reason or the details, and your repayments are then reported against the arrangement rather than as missed payments. A lender you apply to in that period may ask whether the hardship is behind you, but it is usually far better for your file than missed payments or a default.

What if the lender says no?

Lodge a complaint with AFCA, which is free: the lender generally has to pause enforcement while AFCA considers it, although AFCA cannot help once a court judgment has been entered, so act early. A free financial counsellor through the National Debt Helpline can help prepare it, and if a default notice or court claim has arrived, get legal advice straight away; Legal Aid NSW publishes a mortgage stress handbook.

Could refinancing or selling be the better answer?

Sometimes. Refinancing can lower repayments through a sharper rate or a longer term, but lenders assess your current income, so it works best before arrears build up; the refinancing guide sets out what a switch costs. Consolidating debts into the mortgage lowers the monthly total at a long-term cost; see debt consolidation. Selling on your own terms almost always returns more than a forced sale, and if a relationship has ended, see home loans after separation.

What should you say when you call your lender?

Lenders respond faster to a clear, specific request. Before you call, write down four things:

  1. What changed and when: a job loss, reduced hours, illness, a separation or a natural disaster.
  2. How long you expect it to last, even as an estimate.
  3. What you can pay now, from a simple budget of income and essential spending.
  4. What you are asking for: a pause, reduced repayments, interest-only for a period, or a longer term.

Ask for the hardship team by name, note the date and the person you spoke to, and ask for the outcome in writing.

What documents should you have ready?

  • A letter or email showing the change, such as a termination letter, a medical certificate or new payslips.
  • Recent bank statements.
  • A budget showing income and essential costs.
  • Any other debts and the arrangements already made on them.

How does a repayment pause change the loan?

A pause or reduced repayments helps now, but interest keeps running. On a $600,000 balance at the 6 per cent example rate, a three-month pause adds about $9,050 of interest to the loan. If the loan then resumes over the same remaining term, the repayment rises from about $3,744 to about $3,815 a month. Ask the lender to show you the repayment after the arrangement ends before you agree, so the plan works when it finishes as well as while it runs.

What usually helps in common situations?

  • Job loss or reduced hours: a short pause or reduced repayments while you find work, with a plan for the months after.
  • Illness or injury: check income protection or super insurance first, then ask for an arrangement that matches the expected recovery time.
  • A separation: an arrangement buys time while the property settlement is worked out; the separation guide covers the loan options.
  • A fixed rate ending: a jump in repayments when a fixed period ends is often better solved by repricing or refinancing than by hardship.
  • Several debts at once: combining them can lower the monthly total; see debt consolidation, and talk to a financial counsellor first.
  • A natural disaster: lenders often have specific disaster relief, so mention it when you call.

Questions people ask

What happens if I miss one mortgage payment?

The lender will contact you and may charge a late fee, and the missed payment can appear in your repayment history. Calling the lender immediately and arranging to catch up usually keeps it to that.

How long does a lender have to respond to a hardship request?

Generally 21 days from receiving a hardship notice with enough information. If the lender asks for more information, the timeframe runs from when you provide it.

Can the bank take my house if I miss payments?

Not straight away: repossession comes only after a formal default process, notices and usually court action. A hardship arrangement or an AFCA complaint made early stops that process from starting or pauses it.

Who can help me for free?

The National Debt Helpline on 1800 007 007 connects you with a free financial counsellor. AFCA reviews disputes with lenders at no cost, and Legal Aid NSW can help if legal action has started.

If your repayments have become a struggle, Charles Touma can look at whether a different loan or structure would help, before arrears narrow the options. Your lender’s hardship team and a free financial counsellor are the first calls if payments are already being missed. General information only, not credit, legal or financial advice. Sources: National Credit Code hardship provisions and ASIC guidance, AFCA, and Legal Aid NSW, checked 14 October 2026.

General information only, not credit, legal or tax advice. Your situation is assessed properly before any recommendation. Government scheme details change; figures are current at the time of writing.