Four rate rises in 2026 have stretched many household budgets. If your mortgage is becoming hard to keep up with, the most important thing you can do is act early. Lenders have more options when you contact them before you fall behind.
Step 1: Look at the full picture
Write down:
- Your income after tax
- Your mortgage repayment
- Other debts and their repayments
- Essential living costs
Seeing the numbers helps you work out whether this is a short-term squeeze or a longer-term problem. Free financial counsellors can help with this (see below).
Step 2: Talk to your lender early
Under the National Credit Code, you can ask your lender for a hardship variation if you can't meet repayments due to illness, unemployment or other reasonable cause. Lenders must consider your request and respond within set timeframes.
Options they might offer:
- A temporary reduction in repayments
- Interest-only repayments for a period
- Extending your loan term, which lowers repayments but increases total interest
- A short pause on repayments, with interest still accruing
These options help in the short term but cost more overall. For example, Canstar noted that switching a $600,000 loan to interest only adds roughly $28,000 in total interest over the life of the loan.
Step 3: Check for a better rate
If you can still meet repayments but they're tight, reducing your rate may be enough:
- Ask your lender to match a competitor's offer
- Consider refinancing if you can pass a new lender's assessment
- Switch to a cheaper product with your current lender
Step 4: Use your offset or redraw
If you've made extra repayments, you may be able to redraw them, or use offset funds to cover repayments for a while. This buys time, but plan how you'll rebuild the buffer.
Step 5: Reduce other costs
- Consolidate high-interest debts into your mortgage (with care)
- Review insurance, energy, phone and subscriptions
- Pause non-essential spending until things stabilise
If you need to sell
Sometimes selling is the right decision. Selling on your own terms usually gets a better result than a forced sale. Talk to your lender, a financial counsellor and a local agent before it gets to that point.
Free help
- National Debt Helpline: 1800 007 007 (free, confidential financial counselling)
- Moneysmart (ASIC): moneysmart.gov.au has budgeting tools and guides
- Australian Financial Complaints Authority (AFCA): if you're unhappy with how your lender handled a hardship request
How a broker can help
We can't provide financial counselling, but we can:
- Compare your rate with the market
- Approach your lender with competing offers
- Find lenders whose policies suit refinancing in your situation
- Help restructure your loan to reduce repayments
Frequently asked questions
Will a hardship arrangement affect my credit file?
Hardship arrangements are reported on your credit file under comprehensive credit reporting, but they're flagged separately from missed payments and don't count as defaults when you meet the arranged terms.
Can my lender refuse a hardship request?
They can, but they must give reasons and tell you about your right to complain to AFCA.
Should I stop paying other bills to pay my mortgage?
Talk to a financial counsellor first. Prioritising the right debts matters.
If repayments are getting harder, call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We'll look at your rate, structure and options with no judgment.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
