What Happens If I Miss a Mortgage Payment in Australia? (2026)
Missing a home loan repayment doesn’t immediately lead to foreclosure — but it does trigger a process that becomes increasingly serious the longer it continues. Here is what actually happens when a payment is missed in Australia.
Day 1–14: The Missed Payment
Your scheduled repayment is missed. Depending on your lender and account setup:
- A dishonour fee may be charged ($5–$30 typically)
- Your account is flagged as in arrears
- Some lenders send an automated SMS or email notification
- Interest continues to accrue at your standard rate
Nothing permanent has happened yet. Contact your lender immediately.
Day 14–30: Lender Contact and Early Arrears
The lender’s arrears or collections team will typically make contact — by phone, SMS, or letter — to notify you of the missed payment and request it be brought up to date.
At this stage, most lenders are focused on bringing the account current rather than enforcement. You can pay the missed amount plus any fees and the account returns to normal status.
Day 30–60: Formal Arrears Notice
If the payment remains outstanding after approximately 30 days, lenders typically send a formal arrears notice — sometimes called a Notice of Default or Letter of Demand.
This notice:
- Formally records that the account is in arrears
- May set a timeframe to remedy (typically 30 days)
- May outline what will happen if arrears are not resolved
At this point: apply for hardship assistance if you cannot pay immediately. The formal hardship process pauses enforcement action while it is assessed.
Day 60+: Credit File Impact — Default Listing
Under Australian credit reporting law, a lender can list a default on your credit file when:
- The overdue amount is $150 or more, AND
- The debt has been overdue for 60 days or more, AND
- The lender has sent you a default notice with at least 30 days to remedy
A default on your credit file:
- Remains for 5 years
- Is visible to all credit providers
- Can make refinancing, obtaining new credit, or even renting a property significantly harder
Paid vs unpaid defaults: Paying a default does not remove it from your file — it is updated to “paid” but remains visible for 5 years. Unpaid defaults are viewed more seriously.
Months 2–6: Hardship Assessment or Escalation
If you have applied for hardship: the lender is assessing your application and (during a formal arrangement) should not be escalating enforcement or listing defaults for the hardship period.
If you have not applied for hardship and arrears continue to mount: the lender may issue further notices and ultimately issue a Section 88 Notice (or equivalent) — a formal legal notice of intention to take enforcement action.
Enforcement Action — The Last Resort
Australian lenders are required by the NCCP Act to have attempted hardship resolution before pursuing enforcement. Enforcement action typically involves:
- Statement of Claim / Court proceedings — the lender commences legal proceedings to obtain a judgment
- Possession order — the court orders possession of the property
- Notice to vacate — the borrower must vacate the property
- Mortgagee-in-possession sale — the lender sells the property to recover the debt
A mortgagee-in-possession sale often achieves a lower price than a voluntary sale — and the lender’s legal costs are added to the debt before any proceeds are returned to the borrower.
Timeline from first missed payment to forced sale: Typically 6–18 months or longer, depending on how quickly the lender escalates and whether court proceedings are contested.
What to Do After a Missed Payment
| Timeframe | Action |
|---|---|
| Immediately | Contact your lender — pay if possible; if not, explain the situation |
| Within 14 days | Apply for formal hardship assistance if the issue is not temporary |
| If lender is unhelpful | Contact National Debt Helpline (1800 007 007) or AFCA |
| If legal action is threatened | Seek legal advice from a community legal centre or solicitor |
Frequently Asked Questions
Will one missed payment affect my credit score?
One missed payment alone does not automatically create a default listing — defaults require 60 days overdue AND a formal default notice. However, if your loan has Comprehensive Credit Reporting (CCR) — most Australian loans do since 2019 — your payment history is visible, and even one missed payment is recorded in payment history data.
Does making a partial payment help?
A partial payment may reduce the amount in arrears and could prevent a default listing (if it brings the overdue balance below $150). However, the remaining shortfall is still in arrears. Contact your lender to understand how partial payments are applied.
Can I refinance after a missed payment?
It depends on timing and severity. One recent missed payment makes refinancing difficult but not necessarily impossible — some non-bank lenders consider applications with minor arrears. A mortgage broker can help identify which lenders may consider your situation.
Related Guides
- What to Do If You Can’t Make Your Mortgage Repayments
- Mortgage Hardship Provisions — Your Legal Rights
- Selling vs Foreclosure — What Happens If You Default
- Mortgage Repayment Pause — How to Apply for Hardship
- Mortgage Hardship Hub
This article provides general information about missed mortgage payments in Australia. If you are at risk of missing a payment, contact your lender immediately and call the National Debt Helpline on 1800 007 007 for free financial counselling. Find a licensed broker through MoneySmart.