Struggling With Your Home Loan Repayments? How Hardship Help Actually Works

Why I'm writing this one now

Rates have risen several times since the start of 2026, and for a lot of Sydney households the repayment that felt comfortable at settlement is now a real squeeze. If you want the latest on where the cash rate sits, our latest rate update covers it. This post is about something different: what to do if the numbers have stopped working.

The conversations I have with clients in this spot usually start the same way. They have been quietly juggling credit cards, skipping things they used to do, and dreading the next debit. Most of them waited longer than they needed to before asking for help. So here's how hardship help works, in plain terms, so you can use it early if you need it.

What "hardship" means for a home loan

Under the National Credit Code, if you can't meet your loan repayments, you can tell your lender. That's called a hardship notice, and once you give one, the lender has to consider changing your loan to help. It is a formal right under the law, not a favour the bank is doing you.

You don't need to have missed a payment already. You also don't need a lawyer, a special form or a perfect story. Hardship can come from a job loss, reduced hours, illness, a separation, a new baby, or simply repayments rising faster than your income. If you reasonably expect to be able to get back on track with some help, it is worth asking.

How to ask: it can be a phone call

You can give a hardship notice verbally or in writing. Moneysmart says you can contact your lender's hardship team by phone, email or chat. In practice I suggest you call, then follow up in writing (an email is fine) so there is a dated record of when you asked.

When you contact them, be ready to explain:

• What has changed - for example, reduced hours, a medical issue or higher living costs.
• How long you expect it to last - a few months, or longer.
• What you can realistically pay - an honest figure you can stick to.
• Your income and major expenses - recent payslips and a simple budget help.

Moneysmart's advice here is worth repeating: only agree to an amount you can afford. An arrangement you can't keep usually makes things worse.

The timeframes your lender has to follow

This is the part most people don't know. Under section 72 of the National Credit Code, once your lender receives your hardship notice, it generally has 21 days to respond. If it needs more information first, it can ask you for it within that window, and you then have 21 days to provide it. Once you have, the lender has another 21 days to give you an answer.

There is also an important protection while your request is being looked at: a lender generally can't start enforcement action on the loan until it has responded to your hardship notice.

These rules have teeth. In 2025 the Federal Court ordered NAB and its subsidiary AFSH Nominees to pay a $15.5 million penalty after they failed to respond to 345 hardship applications within the required 21 days between 2018 and 2023, following action by ASIC. If you ask for help and hear nothing, follow up, and keep a note of the dates.

What your lender might offer

Every lender and every situation is different, but common options include:

• Reduced repayments for a set period - for example, a lower amount for three to six months while you get back on your feet.
• A short pause on repayments - usually with the interest still added to the loan.
• Interest-only for a period - lowers the repayment, though your balance doesn't go down in that time.
• Extending the loan term - spreads what you owe over more years, so each repayment is smaller, but you pay more interest overall.
• Adding missed amounts back onto the loan - once you are back on track.

A word of caution: most of these options mean more interest over the life of the loan. They're built to get you through a rough patch. That is fine, as long as you go in with your eyes open and a plan to get back to normal repayments.

What happens to your credit report

It's the biggest worry I hear, and it's often what stops people asking. A hardship arrangement can be noted on your credit report as a flag next to your monthly repayment history. Moneysmart says a hardship arrangement won't affect your credit score, and the listing is removed after 12 months.

Other lenders can see the flag while it is there, so if you're planning to refinance or buy in the next year, it is worth knowing it may come up in a conversation. But compare that with the alternative. Missed payments are recorded too, and they are generally far more damaging to future applications than a hardship arrangement that was put in place early and kept to.

If the answer is no

If your lender declines your request, Moneysmart says it must give you reasons. Ask for them in writing. Sometimes a "no" is really "not this option", and a different proposal (a shorter period, or a different amount) gets a yes.

If you are still not happy, you can make a complaint to the lender through its internal complaints process. If that doesn't resolve it, the Australian Financial Complaints Authority (AFCA) is free for consumers and can be reached on 1800 931 678.

For free, confidential help putting together a budget or dealing with your lender, the National Debt Helpline on 1800 007 007 connects you with a financial counsellor at no cost. Be wary of anyone who charges you a fee to "fix" your debts or your credit file. The free services are usually the better first call.

Other moves worth checking at the same time

Hardship help is one tool. Depending on your situation, a few others can sit alongside it:

• Ask for a lower rate. If your rate is well above what lenders offer new customers, a repricing request can cut your repayment without changing anything else.
• Look at refinancing, carefully. A sharper rate or longer term elsewhere can help, but a new lender will reassess your income and do a fresh valuation. Our refinancing guide walks through when it makes sense.
• Use your offset or redraw. If you have money sitting in an offset or available redraw, it can bridge a short gap. Just be careful not to drain your only safety net.
• Tidy up other debts. Credit cards, car loans and buy now pay later often cost more than the home loan. Getting those under control can free up cash each month.
• If an interest-only period is ending, that step-up can be the real cause of the pressure. Our interest-only guide covers the options.

The short version

• You have a legal right to ask your lender for hardship help, by phone or in writing.
• Your lender generally has 21 days to respond, with more time only if it asks you for information.
• Common options include lower repayments for a period, a short pause, interest-only, or a longer loan term.
• A hardship arrangement won't affect your credit score, according to Moneysmart, and the flag is removed after 12 months.
• If you are refused, ask for reasons, complain to the lender, then AFCA if needed.
• Free help is available from the National Debt Helpline on 1800 007 007.
• Ask early. Lenders have far more room to help BEFORE a payment is missed.

If your repayments are getting hard to manage, I'm happy to have a free, no-obligation chat about where you stand. Sometimes the answer is a hardship arrangement, sometimes it is a better rate or a different loan structure, and sometimes it is a mix. With access to more than 70 lenders, we can usually work out fairly quickly what your realistic options are.

This is general information only and not personal financial advice - everyone's situation is different, so please get in touch and we'll look at yours together. For legal questions about your loan contract, please speak with a financial counsellor or a lawyer.

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