Owning a home is a major milestone – but when financial challenges arise, keeping up with mortgage repayments can quickly become overwhelming. Whether it’s due to job loss, illness, reduced hours, or unexpected life changes, many Australians find themselves navigating mortgage stress at some point.
The good news? You’re not alone – and you’re not without options. In this guide, we’ll walk you through practical steps to manage mortgage hardship with confidence and clarity.
1. Assess Your Financial Situation
The first step is to get a clear picture of your finances.
- Review your income, expenses, debts, and savings
- Identify essential vs non-essential spending
- Create a realistic budget that prioritises mortgage repayments, groceries, utilities, and other critical expenses
Knowing exactly where your money is going helps you make informed decisions and identify where you can reduce costs or increase income.
2. Speak to Your Lender Early
If you’re struggling to meet repayments, don’t wait until you’ve missed a payment. Contact your lender as soon as possible.
Most Australian lenders offer hardship assistance programs, including:
- Temporary payment reductions
- Interest-only periods
- Loan term extensions
- Payment pauses (commonly referred to as mortgage holidays)
Be transparent about your circumstances. You’ll likely need to provide supporting documents (such as payslips or medical certificates), so have these ready when you reach out.
3. Explore Government Support
You may be eligible for support through government programs such as:
- National Debt Helpline – free, confidential financial counselling: ndh.org.au
- Centrelink – income support payments or crisis assistance
- State-based hardship grants – some states and territories offer emergency financial relief
Also consider reaching out to a financial counsellor through organisations like Financial Counselling Australia. They can help you navigate your options, liaise with creditors, and make a plan.
4. Understand Loan Modification Options
If temporary support won’t be enough, ask your lender about loan modification. This might include:
- Reducing your interest rate
- Extending the loan term to lower monthly payments
- Switching to an interest-only period temporarily
Loan modifications are designed to make your repayments more sustainable in the long term.
5. Consider Forbearance
Forbearance allows you to pause or reduce repayments for a set period while you get back on your feet.
Things to keep in mind:
- It’s not free money – interest continues to accrue
- Your repayments may increase after the forbearance ends
- You’ll need to work with your lender to agree on the terms
This option is helpful if your hardship is temporary and you’re likely to resume normal repayments soon.
6. Seek Free Housing Advice
There’s no shame in asking for help. Housing counsellors and financial advisors can walk you through your options and help you plan your next steps.
In Australia, try:
- National Debt Helpline: 1800 007 007
- Australian Financial Complaints Authority (AFCA): for lodging disputes with lenders
- Your state’s consumer affairs body: for local support programs
These services are free, independent, and confidential.
7. Explore Foreclosure Alternatives
If you’re facing the possibility of losing your home, ask your lender about alternatives such as:
- Repayment arrangements to bring your account up to date
- Selling the property voluntarily to avoid default
- Short sale (selling for less than the remaining loan balance with lender agreement)
- Deed in lieu of foreclosure (transferring ownership back to the lender)
These options may limit damage to your credit and help you move forward more quickly than formal foreclosure.
8. Take Care of Your Mental Health
Financial stress can take a toll. Make your wellbeing a priority.
- Talk to friends or family for emotional support
- Stay active and maintain a daily routine
- Seek professional help if you’re feeling overwhelmed – services like Beyond Blue and Lifeline are there to support you
Final Thoughts
Facing mortgage hardship can feel isolating, but help is available – and taking action early can make a world of difference.
By assessing your finances, communicating with your lender, and exploring assistance programs, you can find a manageable path forward. With planning, support, and the right advice, you can protect your home and work towards long-term financial stability.