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Mortgages

Information about mortgages and what to do if you are having trouble keeping up with your repayments.

Introduction

A mortgage (also called a home loan) is a consumer credit contract where money is lent by the bank using property as security for the loan. 

A mortgage is registered with the NSW Land Registry Services until the debt is paid in full. 

If you are having trouble making repayments, you can apply for a hardship variation with your lender.

If you stop making repayments on the home loan, the lender can take legal action against you to repossess (take) your home to repay the loan.  

Resolving your dispute with the bank or credit provider

If you have fallen behind with your mortgage repayments, you must act quickly and inform your lender.

You can ask your lender for a hardship variation depending on your circumstances. 

If your lender does not accept your application for a hardship variation, you can apply to the external dispute resolution (EDR) scheme, the Australian Financial Complaints Authority (AFCA). 

Before your lender commences legal action against you, you should consider: 

  • refinancing with another lender
  • applying to your superannuation
  • selling your home.

Default notice and court proceedings

Your lender can send you a default notice if you fall behind with your repayments. You have 30 days to make the payments you have missed and continue to make your usual repayments. It is not too late to talk to your lender about a hardship variation.

After the 30 day default period, if you still haven’t paid the money or entered into a hardship variation, your lender can serve you with a Statement of Claim or a Summons to claim the whole amount of the loan and repossess your home.

Do not ignore a Statement of Claim. You have 28 days to file your response with the Court.

You can:

  • lodge a dispute with AFCA to negotiate a payment plan or ask for more time to sell or refinance your property
  • file a defence if you have very good reasons to show you don’t owe the money and have received legal advice from a lawyer.

If you don’t do anything, your lender can get an order from the Supreme Court of NSW. You will receive a Notice to Vacate asking you to move out of the property within 30 days.

You can apply to the Supreme Court to an urgent stay (stop) for time to sell, refinance or move out of the property. Usually a stay is for seven days and you will need to provide very good reasons as to why you want a stay to be granted.

Repossession

A Sheriff can evict you from the property and change the locks if your lender has a Warrant for Possession.

The lender will sell the property at a public auction to pay the judgment debt. Once the judgment debt and all the expenses relating to the sale has been paid out, the lender will release the remaining money to you. 

If the money from the sale of the property is not enough to cover the judgment debt and expenses, the lender can ask you to pay the balance. 

The lender can enforce the judgment for up to 12 years. 

Contact us

If you have a legal problem in NSW, Legal Aid NSW is here to help you.

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