Behind on your mortgage? Steps to keep your home

Written by My Hardship Letter. Checked against Moneysmart, the National Debt Helpline, Legal Aid NSW, Legal Aid Queensland, the Queensland and ACT Governments, and Financial Rights Legal Centre on 4 November 2026. About us

The short answer: If you can't keep up with your home loan, contact your lender's hardship team now, before things get worse. You have the right to ask for a hardship variation, such as lower or paused repayments for a while. Your lender must give you its decision in writing within 21 days. If you get a default notice, don't ignore it: you have at least 30 days to act. If your lender says no or starts legal action, you can complain to AFCA for free. It's important to do this before the lender gets a court judgment.

Who this guide is for

This guide is for you if:

  • you have a home loan on the place you live in, and
  • you've missed a repayment, or you can see you're about to.

Common reasons are losing work, fewer hours, illness, a separation, a new baby, or rates and living costs going up. Your reason doesn't need to be dramatic. It just needs to be real.

If your loan is mainly for a business, different rules apply. See the National Debt Helpline or the Small Business Debt Helpline (1800 413 828).

Your rights in plain words

Most home loans for the place you live in are covered by the National Credit Code. That gives you some important rights.

  • You can ask for a hardship variation. This is a change to your loan because you can't pay right now. You ask the lender. This clearly covers loans for the home you live in. If your loan is for an investment property, official guidance doesn't spell out whether the same right applies, so check with a financial counsellor or your lender.
  • The lender must answer in writing within 21 days. If they ask you for more information, they have 21 days from when you send it. Source: Moneysmart.
  • If they say no, they must give you the reasons in writing, and tell you about your right to complain to AFCA. Source: National Credit Code section 72, Moneysmart.
  • Before taking legal action, they must send you a default notice. It must give you at least 30 days to catch up the missed payments. Source: Moneysmart, National Debt Helpline.
  • You can go to AFCA (the Australian Financial Complaints Authority) for free. While AFCA is looking at your complaint, the lender can't start or continue legal action. But you need to lodge before the lender gets a court judgment. Source: National Debt Helpline, Legal Aid NSW.

You can still ask for hardship help after you get a default notice. Don't wait for one, though. The earlier you ask, the more options you usually have.

What you can ask for

The National Debt Helpline and Moneysmart list these options:

  • Pausing repayments for a short time (a deferral), if you can show you'll be able to start again
  • Lower repayments for a set time, such as 3 or 6 months
  • Interest-only repayments for a while
  • Extending the loan term, so each repayment is smaller
  • Adding the arrears to the loan and extending the term, so you don't face a big catch-up bill at the end
  • Using redraw, if you've paid extra in the past
  • Time to sell your home yourself, if things are unlikely to improve

Only agree to what you can afford. The National Debt Helpline's advice is clear: if it isn't affordable, don't agree. And don't take a 1-month deal if you know you'll need 6.

Watch the end of the arrangement. Ask what your repayments will be when it finishes. Interest usually keeps adding up during a pause, so repayments can go up afterwards.

How to ask: step by step

1. Work out your numbers.
Write down your income, your essential costs and what's left over. That's what you can offer. The free Moneysmart budget planner helps.

2. Find your lender's hardship team.
Search "[your lender] financial hardship". Most banks have a hardship form, phone number or email on their website. Ask for the hardship team, not general customer service or collections.

3. Make your request.
Phone, use the online form, or send a letter or email. Writing gives you a record. Include:

  • your name, loan account number and current repayment amount
  • that you're in financial hardship and want a hardship variation
  • why, in one or two sentences
  • what you're asking for and for how long
  • what you can afford to pay each week, fortnight or month
  • when you think things will improve

4. Write down everything.
The date, the person's name, any reference number, and what they said.

5. Send any information they ask for quickly. The 21 days restarts from when you send it.

6. Get any agreement in writing, and check it shows the new amount, start and end dates, and what happens when it ends.

7. Keep paying what you can. Even a smaller amount shows good faith.

Want the letter written for you? Our free tool can write your hardship letter in a few minutes. For more on asking your bank, see how to ask your bank for hardship help.

What to say on the phone

"Hi, I'm calling because I'm in financial hardship and I'd like to apply for a hardship variation on my home loan. My account number is [number]. I [lost my job / had my hours cut / am unwell] and I can afford [$ amount] a fortnight for about [3] months. Can you tell me how to apply and when I'll get a decision in writing?"

If you get a default notice or court papers

This is the urgent part. Please don't ignore any letter from your lender.

  1. Default notice: you have at least 30 days. Call your lender's hardship team and the National Debt Helpline straight away.
  2. Statement of claim or summons (court papers): this means legal action has started. Get free legal help today, and lodge a complaint with AFCA as soon as possible. Lodging before judgment gives you the best chance of keeping your home.
  3. After judgment: AFCA can do much less. Legal Aid NSW says AFCA can then only ask for extra time to sell, refinance or move, not a payment arrangement to stay. Get legal advice immediately.

A "letter of demand" isn't a court document. It can come before or after a default notice. Treat it as a warning to act now. Source: National Debt Helpline.

If your lender says no

  1. Ask for the reasons, if they haven't given them.
  2. Make an internal complaint to the lender's complaints team. Ask them to put collection action on hold while they review it.
  3. Complain to AFCA. It's free and independent. AFCA can decide a hardship dispute if you and your lender can't agree. Phone 1800 931 678 or lodge online at afca.org.au. Source: Legal Aid NSW.

More detail: what to do if your hardship request is rejected.

If you might need to sell

If things aren't likely to improve, selling the home yourself usually gets a better price than if the lender takes possession and sells it. Ask your lender for time to sell. They may ask for proof, such as an agent's agreement or the contract of sale. Source: Moneysmart, National Debt Helpline.

Other things worth checking

  • Insurance: check whether your loan has consumer credit insurance, or your super has income protection. Either may cover repayments if you lost work or got sick. Source: National Debt Helpline, Moneysmart.
  • Early release of super: you apply to your own super fund, not the Tax Office. You generally need to have been on certain Centrelink payments continuously for 26 weeks, and your fund will usually want a Centrelink financial hardship letter as proof. You can withdraw between $1,000 and $10,000, once in any 12-month period, paid as a lump sum. It's taxed, so talk to a financial counsellor or your fund about what you'd actually receive before relying on it. Source: Financial Rights Legal Centre.
  • Queensland mortgage relief: the Mortgage Relief Loan is interest-free, up to $20,000, for permanent Queensland residents with mortgage and/or council or water arrears under $20,000 and a mortgage balance under $500,000. You must have already tried your lender's hardship options. Source: qld.gov.au.
  • ACT mortgage relief: the ACT Mortgage Relief Loan, run by the ACT Revenue Office, is also interest-free, capped at $10,000, secured by a caveat over the property, and repaid when you sell, refinance or renegotiate. Source: revenue.act.gov.au.
  • Free up money elsewhere: ask your energy, phone and other providers about hardship plans. See our energy bill guide.

Example hardship letter

Subject: Financial hardship request, home loan account [number]

Dear Financial Hardship Team,

I am writing to ask for a hardship variation on my home loan, account number [number]. My current repayment is $[amount] per [fortnight/month].

On [date] I [lost my job / had my hours reduced / became unwell and stopped work]. Our household income has dropped and I can't meet my full repayments right now.

I would like to ask for [reduced repayments of $[amount] per fortnight for 6 months / a 3-month pause on repayments / interest-only repayments for 6 months]. I expect my situation to improve by [month], when [I start new work / I return to work].

I would also like to know how any missed or reduced repayments will be handled when the arrangement ends.

Please let me know if you need information about my income and expenses. Please give me your decision in writing, and place any collection action on hold while you consider this request.

Thank you,
[Your name]
[Phone] · [Email]
[Date]

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Free help

  • National Debt Helpline: free, confidential financial counselling. 1800 007 007, weekdays 9:30am to 4:30pm, live chat weekdays 9am to 8pm. ndh.org.au
  • Australian Financial Complaints Authority (AFCA): free disputes with lenders. 1800 931 678, afca.org.au
  • Legal Aid Queensland: free legal help if you've had court papers. 1300 65 11 88, weekdays 8:30am to 4:30pm, legalaid.qld.gov.au. Other states: search "Legal Aid" plus your state.
  • Mob Strong Debt Help (Aboriginal and Torres Strait Islander peoples): 1800 808 488
  • Ask Izzy (askizzy.org.au): find emergency relief such as food or transport vouchers near you.

Sources (checked November 2026)

This guide is general information only, not legal or financial advice. Your situation may be different. For free, confidential help, call the National Debt Helpline on 1800 007 007.