Missed a Mortgage Repayment? What Happens Next in Australia

Short answer

If you have missed a mortgage repayment, or think you will miss one, contact the lender's hardship team as early as possible. Explain what changed, how long the difficulty may last and what amount you can realistically pay. Keep copies of the request and the lender's response.

A missed payment does not automatically mean the lender will take the home. It can lead to arrears, interest, fees, credit-reporting consequences and formal recovery steps if it remains unresolved. The exact sequence depends on the loan, lender and circumstances.

ASIC Moneysmart says a lender may agree to change the loan terms or temporarily reduce or pause repayments through a hardship variation. It also says the lender must write within 21 days with the outcome, or within 21 days after requested information is supplied.

What to do first

1. Contact the lender's hardship team using the number or secure message channel on the lender's official website or statement.
2. State that you are experiencing financial hardship and want to discuss a hardship variation.
3. Give the loan details, reason for difficulty, expected duration and an amount you can afford now.
4. Ask what happens to interest, fees, the loan balance, term and future repayment under each option.
5. Keep paying an amount you can genuinely afford if the lender and your budget allow it.
6. Keep written records, including dates, names, reference numbers and documents supplied.

Do not promise an amount that the household cannot maintain. If circumstances change, contact the lender again rather than letting a proposed arrangement fail without explanation.

What a hardship arrangement may change

A lender may discuss a temporary repayment reduction, a repayment pause, a changed loan term or another arrangement. None is automatic, and approval terms vary.

A pause does not usually erase the skipped amount. Interest may continue, and arrears or capitalised amounts can increase the balance or later repayments. A longer term can reduce the scheduled payment while increasing total interest over time.

Ask the lender to confirm in writing:

• the start and end dates;
• the amount due during the arrangement;
• whether interest and fees continue;
• how unpaid amounts will be treated;
• the repayment and remaining term afterwards; and
• how the arrangement will be reported on the credit file.

Worked example: a three-month pause is not a saving

Assume a $500,000 principal-and-interest loan at 6.5% with 30 years remaining. A standard monthly repayment estimate is about $3,160.

Three scheduled payments total about $9,481. If a lender agrees to pause them, that amount has not disappeared. Interest may continue to accrue and the lender may capitalise unpaid amounts, extend the term, increase later repayments or use another treatment.

The Mortgage Repayment Calculator can estimate the original scheduled payment, but it cannot reproduce a hardship agreement. Use the lender's written balance, rate, term and post-arrangement payment for the next calculation.

How a default notice fits in

Moneysmart says a lender can issue a default notice when a repayment becomes overdue, although it may wait. The notice gives 30 days to pay the missed amounts plus the regular repayment stated in the notice. A borrower can still request a hardship variation at that stage.

If the issue is not resolved after the default period, formal legal steps can follow. Time limits differ across states and territories. If you receive a default notice, Statement of Claim, summons, Notice to Vacate or similar legal document, do not ignore it. Contact the lender, a free financial counsellor and an appropriate legal service promptly.

This page is not a substitute for legal advice about a notice or court process.

Credit reporting and hardship information

The Office of the Australian Information Commissioner says a financial hardship arrangement is recorded on a credit report together with repayment history information. The report uses an indicator showing that a temporary or permanent arrangement applied, but it does not include the reason for the arrangement.

The OAIC says a temporary arrangement indicator is removed one year after the arrangement's final repayment. A permanent variation indicator is removed one year after the arrangement started. It also says a credit reporting body cannot use financial hardship information to calculate a credit score.

Ask the lender how the arrangement and any missed payments will be reported. You can also obtain a credit report to check what is recorded.

If the lender refuses or the response is unclear

The lender must give a reason if it refuses a hardship request. Start with the lender's internal dispute resolution process.

If the matter remains unresolved, the Australian Financial Complaints Authority provides free, independent dispute resolution for eligible complaints. Time limits can apply, so check AFCA's current process rather than delaying.

The National Debt Helpline provides free financial counselling on 1800 007 007. A financial counsellor can help prepare a budget, communicate with a lender and understand practical options. This is different from a commercial debt-management or refinancing service.

Common mistakes to avoid

• Waiting for several missed payments before contacting the lender.
• Treating a repayment pause as debt forgiveness.
• Agreeing to a payment that the household cannot sustain.
• Ignoring a default notice or court document.
• Relying on a phone conversation without keeping a record.
• Assuming a refinance is available or suitable while already in arrears.
• Paying an unverified business that promises to repair a credit file or stop enforcement.

Sources and free support

• ASIC Moneysmart: Problems paying your mortgage, last updated 18 June 2026 and checked 22 August 2026.
• OAIC: What is financial hardship information?, checked 22 August 2026.
• Australian Financial Complaints Authority: Financial hardship complaints, checked 22 August 2026.
• National Debt Helpline: Home loans, checked 22 August 2026.

General information disclaimer

This guide provides general information only. It is not financial, credit or legal advice, a hardship decision, a lender offer or a recommendation to change or sell a home. Contract terms, interest, fees, credit reporting, notices and legal processes vary. Contact the lender and obtain free financial counselling or legal advice appropriate to the circumstances.

Last updated: 22 August 2026.