What should I do if I have problems repaying my mortgage?

You could consider refinancing your mortgage to see if you can get a significantly lower interest rate, which would bring down the repayment amount. However, if you don’t find a comfortable repayment size, you would still struggle to keep up with mortgage payments. If you are facing genuine financial hardship and struggling to make mortgage repayments, you should discuss alternative arrangements with your mortgage lender immediately. 

Suppose your lender allows you to pause repayments for six months or agrees to accept a lower minimum repayment during this time. This could keep you from defaulting on your mortgage, but the lender may require you to prove that you are genuinely facing difficulties and submit a formal request to make a hardship variation on your mortgage. Note that lenders are required to respond to such a request within 21 days or ask you for further information within that duration. If the lender doesn’t approve your request, you can ask for an explanation and even seek dispute resolution.

You may feel that you are merely facing a short-term cash crunch, but remember that loans and credit card debts also require you to pay interest and, in some cases, late payment fees as well. Going over all your household expenses, including utilities and groceries, can help you identify potential savings or ways to minimise your debts. Where necessary, such scrutinising can also suggest any lifestyle changes that would help you meet your financial obligations.

If you are going through a tough time financially, a financial counsellor can advise you on how to better manage your income, expenses, and other debts and can also negotiate with lenders on your behalf. If you are struggling to repay your debts in Australia, you can contact the National Debt Helpline and seek professional guidance on sorting out your money problems, at no cost. 

Knowing the exact debts and expenses you face is a helpful step in determining the kind of support you need and understanding the likely consequences of the options available to you. While a couple of missed payments may not appear serious, they may indicate a larger problem with debt that you should not ignore.