What to Do If You Can’t Make Your Mortgage Repayments (Australia 2026)

Missing a mortgage repayment can feel overwhelming — but you have more options than you might think. Australian law requires lenders to support borrowers experiencing genuine hardship. Here is exactly what to do.

Act Immediately — Do Not Wait

The most important thing you can do is act as soon as you know you will miss a payment — ideally before it happens.

The longer you wait:

The more interest and fees accumulate
The more repayments fall behind (compounding the problem)
The fewer options your lender can offer
The greater the risk of credit file damage and enforcement action

Step 1: Call Your Lender’s Hardship Team

Every Australian lender with a residential mortgage product is required by the National Consumer Credit Protection Act 2009 (NCCP Act) to have a hardship team and hardship assistance program.

Call your lender directly and say: “I am experiencing financial hardship and would like to discuss my options under your hardship program.”

Have ready:

Your loan account number
A brief explanation of the reason for hardship (job loss, illness, separation, cost of living)
Your current income and expenses
How long you expect the difficulty to last (temporary vs ongoing)

The lender must:

Consider your application
Respond within 21 days
Offer options appropriate to your situation

Step 2: Know Your Hardship Options

Depending on your situation, lenders may offer:

Option	What it means
Repayment pause	1–6 months with no required repayments (interest continues to accrue)
Reduced repayments	Pay less than the standard amount for a period
Interest-only period	Pay only interest (no principal) for 6–24 months
Loan term extension	Spread remaining balance over more years to reduce monthly payments
Capitalise missed payments	Add arrears to loan balance and continue from there
Refinance at lower rate	If your rate is high, refinancing may reduce repayments

→ See Mortgage Repayment Pause — How to Apply for Hardship for a detailed guide.

Step 3: Get Free Financial Counselling

A financial counsellor can:

Help you understand all your options
Negotiate with your lender on your behalf
Help you prioritise debts
Connect you to emergency relief if needed

National Debt Helpline: 1800 007 007 (free, Mon–Fri 9:30am–4:30pm AEST)

Financial counsellors are free because they are funded by government and charities. They do not sell products.

Step 4: If the Lender Won’t Help — AFCA

If your lender refuses a genuine hardship application or does not respond within 21 days, you can lodge a free complaint with the Australian Financial Complaints Authority (AFCA).

AFCA: afca.org.au | 1800 931 678 (free)

AFCA can order lenders to provide hardship assistance in appropriate circumstances.

What NOT to Do

Do not:

Ignore the problem and hope it resolves itself
Stop communicating with your lender without formally applying for hardship
Use a credit card or personal loan to make mortgage repayments (increases total debt, delays the inevitable)
Pay a “credit repair” company claiming to fix your situation (many are scams — see ASIC MoneySmart)
Refinance without understanding all fees — refinancing costs money and may not help if the underlying issue is affordability

Missed Payments — What Happens on Your Credit File

A missed payment is recorded on your credit file as a default if it is 60 or more days overdue and $150 or more. Defaults remain on your file for 5 years and can make it significantly harder to refinance.

If you have formally lodged a hardship application with your lender:

Lenders are generally required not to list the hardship period as defaults during a formal hardship arrangement
Acting before a missed payment prevents any listing at all

→ See What Happens If I Miss a Mortgage Payment?

Frequently Asked Questions

Can my lender foreclose immediately if I miss one payment?

No — lenders must follow a structured enforcement process under the NCCP Act and the Mortgage Code of Practice. A single missed payment does not lead to immediate foreclosure. Most lenders are required to issue formal notices and allow time to remedy before taking enforcement steps.

Can I voluntarily sell if I’m in hardship?

Yes — selling is always an option and is usually preferable to foreclosure. A voluntary sale gives you control over timing, agent, and price. → See Selling vs Foreclosure

Will hardship assistance affect my credit score?

A formal hardship arrangement, properly documented, should not result in default listings on your credit file during the assistance period. Contact your lender to confirm how the arrangement will be reported.

This article provides general information about mortgage hardship in Australia. For free, confidential financial counselling, call the National Debt Helpline on 1800 007 007. Find a licensed mortgage broker through MoneySmart.