Interest rate rises have led to many people experiencing financial hardship. Read this factsheet to find out what you can do if you are behind on your home mortgage repayments or have received a default notice from your lender.
My low fixed rate interest rate ends soon
If you have been on a low fixed interest rate and that rate ends soon, don’t leave it until you can’t make repayments. See a free financial counsellor to find out your options. Visit the National Debt Helpline website or call 1800 007 007.
Here are some ways you could reduce your repayments:
- Consider refinancing to get a better deal with your current lender.
- Check you are not paying too much for offset and redraw accounts.
- Find a lender with a lower rate and an easier stress test.
- Extend the loan term (this means paying more interest in the long term).
- Switch to interest-only for two years (this means paying more over the term of the loan).
Don’t wait for the problem to become urgent. Act now.
I am behind in payments, but I haven’t received a default notice from my lender
If you are behind in repayments – act now. Your lender may agree to a financial hardship arrangement or variation (usually 3–6 months). This means your lender will accept reduced payments to give you time to refinance, or, if you won’t be able to afford the mortgage long-term, time to sell your home.
I have received an arrears letter or default notice from my lender
You should get legal advice immediately if you have received:
- an arrears letter or formal default notice from your lender
- threats of legal action
- a statement of claim from the court, or
- a notice to vacate your home from the Sheriff.
Your right to make a financial hardship arrangement with your lender depends on where the lender is up to in the process.
What can I do?
It is never too late or too early to get advice. Visit the National Debt Helpline website or call 1800 007 007.
Negotiate a financial hardship arrangement with your lender. You have a right to reduce or postpone your payments if you are in short-term hardship because of something outside your control.
If you and your lender cannot agree on a repayment arrangement, lodge a complaint with the Australian Financial Complaints Authority (AFCA) immediately. AFCA is the best way for you to resolve your financial hardship complaint with your lender.
The lender cannot start or continue legal action or take possession of your home while your matter is being considered by AFCA.
For more information visit the Australian Financial Complaints Authority website or call 1800 931 678.
Do I need to consider selling my home?
You need to consider selling your home if you will continue to be unable to afford your loan repayments for some time to come.
You need to make this decision as early as possible because:
- it is better to sell your home yourself rather than have the lender sell the home for you, and
- you are more likely to get a better price for your home and avoid lots of legal costs if you sell your own home.
Talk to a free financial counsellor before you consider this option.
What about accessing my superannuation?
The Australian Taxation Office (ATO) will consider an application to release superannuation early on compassionate grounds if you are in financial hardship. Generally you can withdraw three months worth of mortgage repayments and 12 months worth of interest.
Get advice on whether accessing your superannuation is a good option in your situation. Talk to a free financial counsellor.
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Important!
Don’t risk losing both your superannuation and your house. Your superannuation is usually protected from bankruptcy – as long as it stays in your super fund. If you owe more in debts than your house is worth, there is a risk you may end up bankrupt, losing both the house and any super you withdrew.
Where can I find more information?
The Mortgage stress handbook is a free publication is a practical guide for people having trouble with their mortgage. It includes information about what you can do to stop the lender taking possession of your home, how to negotiate a repayment arrangement, accessing your superannuation, and getting a stay if the lender has a court order to evict you from your home.
Order or view a copy via the Publications and resources page.
Where can I find help?
AFCA is a free and independent complaint resolution scheme for people who are unable to resolve complaints with financial services organisations.
For more information visit the Australian Financial Complaints Authority website or call 1800 931 678.
FRLC is a free independent community legal centre providing legal advice and financial counselling for people in financial stress.
For more information visit the Financial Rights Legal Centre website or call 1800 844 949.
LawAccess NSW is a free information service run by Legal Aid NSW. Anyone who has a legal problem in NSW can contact LawAccess NSW for legal help.
Speak with LawAccess NSW via web chat or call 1300 888 529 between 9am and 5pm, Monday to Friday (excluding public holidays).
To contact a financial counsellor or get help with debt problem visit the National Debt Helpline website for a range of step-by step guides, or call 1800 007 007 to get your finances back on track.
Last updated: March 2024