Behind on your mortgage? What to do, step by step

Step 1: Don't ignore it

The hardest part is the first call. Lenders deal with missed payments every day, and most would much rather agree an arrangement than go to court. The longer the silence, the fewer the choices.

Step 2: Ask for hardship help

If you can't meet your repayments because of illness, unemployment or another reasonable cause, you can ask your lender for a hardship variation. That might be a temporary pause, lower repayments for a period or a longer loan term. Your lender must reply in writing within 21 days, and give reasons if it says no.

Step 3: Understand the default process

If repayments stay unpaid, your lender can send a default notice. It gives you at least 30 days to pay the overdue amount. If you don't, the lender can begin legal action to take possession. Timelines for court steps differ between states and territories.

Step 4: Look at refinancing

If you have equity and your income now supports a loan, a specialist lender may refinance your mortgage and clear the arrears at settlement. It costs more than a standard loan at first, but it can stop the default process and give you a fresh start. See refinancing a mortgage in arrears.

Step 5: Fix what's behind it

• Too many debts? Consolidating them into the mortgage might lower your total outgoings.
• Tax debt piling up? See home loans with an ATO debt.
• Income dropped for good? Selling yourself usually gets a better price than a mortgagee sale and protects what equity you have.

A sample hardship request

Keep it short and factual. Something like:

Free sample letters are also available from community legal services and the National Debt Helpline.

Mistakes that make things worse

• Ignoring calls and letters from your lender.
• Taking out payday loans or buy now pay later to cover mortgage repayments.
• Paying a 'debt fix' company upfront fees before getting free advice.
• Waiting for court papers before acting.
• Moving out and leaving the property unmanaged.