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What Happens to My Mortgage If I Lose My Job?

Losing your income does not mean losing your home. The options available, what your lender can do, and how to prepare before it happens.

HomeBlogWhat Happens to My Mortgage If I Lose My Job?

By Jason Given · April 2026 · 5 min read

The first thing to understand

Losing your job does not mean losing your home. Banks do not want to repossess your property — it is expensive, time-consuming, and they recover less than market value. What they want is for you to communicate, engage with their hardship process, and work toward a resolution.

The critical mistake is going silent. Missing repayments without contacting your lender is what escalates the situation.

Your options

  • 1.Hardship variation — your lender can temporarily reduce or pause repayments for 3–6 months. Interest still accrues, but it gives you breathing room to find new employment.
  • 2.Redraw — if you have made extra repayments, you may be able to redraw those funds to cover repayments during the gap.
  • 3.Offset account — savings in your offset reduce the interest-bearing balance. Drawing from your offset to cover repayments is preferable to missing payments.
  • 4.Loan restructure — extending your loan term reduces the minimum repayment. This costs more over the life of the loan but protects your position in the short term.

How to prepare now

The best protection is preparation: maintain 3 months of repayments in your offset or redraw, keep your loan competitive (a lower rate means a lower minimum repayment), and ensure your loan has flexible features that give you options if circumstances change.

If you are concerned about your financial position or want to make sure your loan is structured to protect you, book a free chat. We review your loan's flexibility and recommend changes if needed — at no cost.

Frequently asked questions

Will the bank take my house immediately?

No. Lenders do not want to repossess properties — it is a last resort that costs them money. If you contact your lender early, they are required to work with you to find a solution. This typically includes reduced repayments, a temporary pause (hardship variation), or restructuring the loan.

Should I tell my lender I lost my job?

Yes — and as early as possible. Lenders are legally required to consider hardship applications and respond within 21 days. The earlier you reach out, the more options are available. Waiting until you have already missed payments reduces your options and damages your credit file.

Can I refinance while unemployed?

Generally no — lenders require current income to approve a refinance. However, if you have a partner with income, or if you secure new employment quickly, refinancing to a lower rate can reduce your repayments and ease cash flow pressure. Lendology can advise on timing and options.

Related reading
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