Problems paying your mortgage – How to get help to avoid mortgage default

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If you’re struggling with your home loan repayments, there is help available. The earlier you get help, the more options you’ll have. 

If you receive a default notice, do not ignore it. Talk to your lender or get free legal advice immediately.

Contact your lender

All lenders have hardship teams ready to help customers in tough times.

Talk to your lender to discuss your options. You may be able change the terms of your loan, or temporarily pause or reduce your repayments. This is called a hardship variation.

Some banks are offering six-month repayment deferrals on mortgages for customers impacted by coronavirus. Talk to your bank about how they can help you.


  1. Contact your lender’s ‘hardship officer’.
  2. Give the details of your loan (account name and number, and the amount you pay each fortnight or month).
  3. Say that you want to change your loan repayments because you are experiencing hardship.
  4. Explain why you are having difficulties making payments. Tell them how long you think your financial problems will continue and how much you can afford to repay.

The Financial Rights Legal Centre sample letter generator can help you create a letter to send to your lender.

Your lender must write to you within 21 days to let you know the outcome of your hardship request. If they ask you for more information, they must respond within 21 days from when you provide it.

If your lender agrees to a hardship variation

  • Negotiate an amount that you can realistically afford to pay each fortnight or month.
  • Make a plan to get back on track. Look at your budget to see if there’s anything you can cut back on or manage differently.
  • Talk to your utility providers’ hardship teams about paying electricity, gas, phone or water bills in instalments. Or shop around to see if you can find a better deal.
  • If you can’t meet the terms of the new payment plan, contact your bank to discuss the situation.
  • If you need help, contact us for financial advice.

If your lender refuses a hardship variation

Your lender must give a reason if they refuse your hardship request. If you’re not happy with their response, contact their internal dispute resolution team.

If you can’t reach an agreement, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution.

If you’ve fallen behind on your mortgage because of accident or sickness, you may have income protection insurance that can cover your repayments. You may have this insurance with your super.

Steps a lender can take if you’re behind on your mortgage

Lenders have to follow a specific set of steps before they can take your home.


Your lender can send you a default notice the day your repayment becomes overdue. However, they may wait until your repayment is 90 days or more overdue. The default notice will give you 30 days to make the payments you’ve missed plus the regular repayment on your loan. You can still apply for a hardship variation at this stage.


Your lender can serve you with a Statement of Claim or a summons. This is the of start legal action against you to claim the whole amount of your home loan.

You have a set number of days to file a defence or lodge a dispute with a dispute resolution scheme. The number of days is different in each state or territory.

If you do nothing, your lender can take action to repossess your home.

Get legal advice if you receive a Statement of Claim.


If your lender gets a court order to repossess your home they will send you a Notice to Vacate or a Sheriff’s letter. Your lender may also get a Warrant for Possession. A sheriff (or bailiff) will come to your home, evict you from the premises and change the locks.

This does not release you from the obligation to pay your loan. Your lender may sell your home and recover any outstanding balance by taking further legal action. This can include making a claim to sell your other assets.

Look after yourself and get help

If you’re feeling overwhelmed by money issues, it’s okay to ask for help.

Wealthness Pty Ltd ABN 13 231 248 112  [t/a Better Financial Planning Australia]  is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL No. 236523. It is important to be aware that Better Financial Planning Australia is not authorised by Infocus to provide advice relating to credit services or property advice. Infocus is not responsible for any advice outside of the scope of this authorisation and should you wish to act on any of this general information, please first seek professional financial advice.

Wealthness Pty Ltd t/as Better Financial Planning Australia will endeavour to update the website as needed. However, information can change without notice and Wealthness Pty Ltd t/as Better Financial Planning Australia does not guarantee the accuracy of information on the website, including information provided by third parties, at any time.

This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. Infocus Securities Australia Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances. Although we consider the sources for this material reliable, no warranty is given and no liability is accepted for any statement or opinion or for any error or omission.

Wealthness Pty Ltd t/as Better Financial Planning Australia does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this website. Except insofar as any liability under statute cannot be excluded, Wealthness Pty Ltd t/as Better Financial Planning Australia and its employees do not accept any liability for any error or omission on this website or for any resulting loss or damage suffered by the recipient or any other person.

Wealthness Pty Ltd (ACN 613 313 250) [t/a Better Financial Planning Australia] Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL Licence No. 236523.

APRIL 19, 2020

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