How to survive a mortgage if you're going through financial hardship

You’re likely experiencing financial hardship if there’s been changes in your circumstances that are making it difficult to meet your debt repayments.

These circumstances can include (but aren’t limited to):

• unemployment
• illness or injury
• interest rate rises
• the loss of a loved one
• a pandemic
• natural disasters such as floods and bushfires
• business downturns
• family and domestic violence.

There are a number of different avenues you can go down when it comes to seeking financial support to meet your mortgage repayments. Discover what your options are below.

Contact your bank 

Almost all lenders have hardship teams dedicated to helping customers through financially challenging times. Don’t be afraid to reach out to them to see what options are available to you. One of these options may be hardship variation; this involves temporarily pausing or reducing your repayments, or extending the term of your home loan, to keep your individual repayments down.

If your lender refuses a hardship variation and you’re not happy with their response, you can try contacting their internal dispute team to appeal the decision. If you can’t reach an agreement with the dispute team, you may want to make a complaint to the Australian Financial Complaints Authority (AFCA), where you can get free, independent dispute resolution.

Some other options lenders may be able to offer include:

• switching your repayments over to interest-only for a period of time, to reduce how much you have to pay
• accessing funds, if you’re ahead on your repayments and have a redraw facility attached to your home loan (be aware that this may incur a fee)
• accessing a portion or the entirety of your available offset balance, if you have an offset account.

Government initiatives

If you live in Queensland or the Australian Capital Territory, you may be able to access mortgage relief loans if you meet the eligibility criteria. These are designed to provide short-term relief for those struggling to make their home loan repayments due to unemployment, illness, accident, or some other unexpected or unforeseen crisis.

Here’s a summary of the respective loans and what they offer:

• Queensland: The Mortgage Relief Loan is interest free with no application fees or ongoing charges. You can borrow up to $20,000, which is repayable over 10 years (in addition to your home loan repayments). Repayments start 12 months after you acquire the loan.
• Australian Capital Territory: The Mortgage Relief Fund is also interest free. You can borrow up to $10,000, which can only be used as payment towards arrears on your mortgage, or a combination of arrears and future payments (with arrears capped at $5,000). 

Insurance policies

It’s also worth checking to see if you have any insurance policies, such as mortgage protection, income protection or redundancy, that may cover your home loan repayments for a certain period if you’ve lost your job.

If you have one of these insurance types, it may help you keep up your repayments while you look for another job or figure out a long-term financial solution if you’re unable to return to work.

Speak to a financial counselor

Whether you’re experiencing financial hardship for the first time, or have been for a while, it could be worthwhile discussing your situation with a financial counselor. They’ll be able to provide you with free, confidential advice and create pathways to help ease your financial burdens. If you’d simply like some guidance as to which financial hardship option best suits your circumstances, you can also ask them for their professional opinion and they may be able to point you in the right direction.

You can speak to a financial counselor by contacting the National Debt Helpline on 1800 007 007. You may also be able to receive free financial counseling through community organisations and legal centres, as well as government agencies.