Hardship variation to your home loan

Consumer credit laws apply across Australia for credit transactions and define the responsibilities of parties to those transactions.

You may request to have your mortgage repayments varied if you

  •  are experiencing financial difficulty and
  • you are able to show that if the payments are varied you will be able to repay your home loan.

Ask your lender to vary the terms of your contract so your mortgage payments are more affordable for you in your circumstances. This might mean asking for lower repayments or to make no payments for a few months, or both.

Keep your lender informed if you cannot maintain a payment plan you’ve agreed to. If you don’t do this and simply miss payments, your lender may commence legal action that leads to repossession of your home.

If your lender refuses a hardship variation  that you can manage, you should apply to the relevant external dispute resolution scheme for a hardship variation as soon as possible to stop any enforcement action, such as court proceedings and repossession of your home.

See Consumer Action’s fact sheet Financial Hardship.

Case study

Saarah and Ahmed got into financial difficulty due to a period of unemployment. They fell three months behind on their mortgage repayments. They have since found work. However, because they did not contact their mortgagee about their financial difficulties, it served them with a Supreme Court Writ of Possession to take and sell their house.

Now that they have resumed work they can start making their normal payments. They have also applied to access their superannuation to pay out the three month arrears, but have been advised that this will take at least 4 weeks to come through by which time their mortgagee may have been able to obtain a court order to sell their home.

Saarah and Ahmed immediately contacted their mortgagee when they received the Writ and were told that it would continue to seek a court order against them but it wouldn’t sell the house on the basis that their superannuation was going to pay out the arrears. Saarah and Ahmed were concerned about the mortgagee getting judgment against them so they quickly sought the advice of Consumer Action Law Centre who advised they were entitled to request a hardship variation under the National Credit Code and there was no need to access their superannuation. Because court action had started, Saarah and Ahmed were advised to lodge a complaint and ask for a hardship variation from the relevant external dispute resolution scheme immediately.

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