Home Loan Hardship: What to Do If You Are Struggling

Published June 2026

Falling behind on your mortgage or worried you might? Here are the practical steps you can take, the options your lender must offer, and how to get back on track.

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By Jason Given - June 2026 - 6 min read

Contact your lender early

If you are struggling to meet your repayments - or you can see it coming - the single most important thing you can do is contact your lender before you miss a payment. Lenders are legally required to consider hardship requests under the National Credit Code, and they have dedicated hardship teams for exactly this situation.

The earlier you reach out, the more options you have. A borrower who calls before missing a payment has far more flexibility than one who calls after three months of arrears.

Options your lender can offer

1.Reduced repayments - temporarily lower your repayments to an amount you can manage. The shortfall is added to your loan balance
2.Interest-only period - switch to interest-only for 3-12 months, reducing your repayment by removing the principal component
3.Repayment pause - in severe cases, some lenders will allow a temporary pause on repayments. Interest continues to accrue but you get breathing room
4.Loan term extension - extending your loan term from 25 to 30 years (for example) permanently reduces your minimum repayment
5.Refinancing to a lower rate - if your rate is not competitive, moving to a lower rate can reduce your repayment by hundreds of dollars per month without any hardship arrangement

Refinancing as a solution

Sometimes the simplest fix is the most effective. If you have been with the same lender for years and your rate has drifted above market, refinancing to a competitive rate can significantly reduce your repayments. On a $500,000 loan, a 0.50% rate reduction saves approximately $160 per month.

Lendology can check whether you are overpaying and whether a refinance would help - even if your financial position has changed.

If you are feeling the pressure on your mortgage, book a free chat. We will review your current loan, check if a rate reduction or restructure could help, and talk through your options honestly. No judgement.

Frequently asked questions

What happens if I miss a mortgage payment?

A single missed payment is not a crisis. Most lenders will contact you, apply a late fee, and give you time to catch up. It becomes more serious after 30, 60, and 90 days. A payment that is 14+ days late can appear on your credit file. The key is to contact your lender before you miss a payment rather than after.

What is a hardship variation?

A hardship variation is a temporary change to your loan terms to help you through a difficult period. Lenders are required by law to consider hardship requests. Options include reduced repayments, an interest-only period, a temporary pause (forbearance), or extending your loan term to lower your repayment.

Will hardship affect my credit score?

A formal hardship arrangement itself should not appear on your credit file as a negative mark. However, any payments that were already late before the arrangement was set up will still be recorded. This is another reason to contact your lender early - before you actually miss a payment.