Missed a mortgage repayment
Missing a repayment, not the end of the
You might think that missing a mortgage repayment is a pretty
bad situation. But the good news is that it's not the end of the
world and you do have options. By acting fast, you can get your
mortgage payments back on track.
Here are some simple things you can do to get a recovery plan in
Contact your lender
If you miss a mortgage repayment, the first thing to do is
contact your lender. Your lender must assess and respond to your
Explain to your lender:
- Why you missed a repayment
- How you plan to catch up (can you find the money now or pay
back what you owe over the next few months?)
- What they can do to help you get back on track
Get over the fear factor
Most people find it stressful and embarrassing to talk with
their lender about why they missed a mortgage repayment. But
remember, getting into financial difficulty is something that could
happen to anyone. Taking action quickly means you can stop a small
problem from becoming a big one.
The money you owe is called 'arrears'. This is the term your
lender is likely to use when speaking to you.
Create a budget
If you have missed a mortgage repayment, getting a clear picture
of where your money is going will help you to better manage your
Set up your budget to make sure your money goes
where you want it to.
For more tips see how to do a budget.
Here are your options if you have missed a mortgage
Bring your repayments up to date
Do this if you can find the money or sell some assets to raise the money.
Before you come to a new agreement with your lender, be
realistic about what repayments you can afford.
Change the terms of your loan
If you think your problems are short term and can be sorted out
in 3 months, your lender can help you by changing the terms of your
loan. You can ask them to temporarily reduce your repayments or
delay your repayments. This is called a hardship
If your problems are long term and your circumstances don't look
like they will change, you may need to consider selling your home. See behind on your mortgage for the
steps the lender can take.
If you are not happy with your lender's response you can ask to
speak to their internal complaints section.
Talk to the Ombudsman
If you are still not satisfied with the lender's decision you
can contact a free external dispute resolution scheme. Your lender
must tell you which one of these two schemes it belongs to: Financial Ombudsman
Service (FOS) - 1800 367 287 or Credit and
Investments Ombudsman (CIO) - 1800 138 422.
Claim on your insurance
If you took out unemployment, accident or sickness insurance
when you got your loan, you may be able to claim on that insurance.
Check out your policy or call your insurer to see if your policy
covers your current circumstances.
If you have other personal loans or credit card debts and you
can't pay them, contact your credit providers to
negotiate a payment plan.
Get help from utility billers
If you are having trouble paying your water, phone, gas or
electricity bills and this is affecting your ability to pay your
mortgage, contact your utility providers. See if you can negotiate
a better repayment arrangement with them. See dealing
with utility bills.
Sell your home and buy a cheaper
one or renting
If your repayments are no longer affordable, you may have to
seriously consider selling your home and downsizing or renting. Of
course this will take time to arrange, so you will still need to
negotiate a plan with your lender about how you intend to manage
this. This decision is one that requires careful thought and
planning, so make sure you take stock of the options and seek
See our case study on equity
stripping on the pitfalls to avoid.
Ask for help
Need more help? If you are unsure what to do or are having
trouble negotiating with your lender, you can get free,
confidential help from a financial counsellor.
Things to avoid
If you start to struggle with your mortgage, there are some
strategies that could make your situation worse. Try to avoid:
- Borrowing more money or using your credit
cards - If your existing loan is already unaffordable, you
don't want to get yourself deeper into debt. See trouble with
- Borrowing from family and friends - While this
may work for some people, it can add to your debts plus you'll have
the social pressure of owing money to your loved ones. See loans involving family
- Refinancing or consolidating your debts - If
you are thinking about rolling all your loans into one, know the
risks involved and watch out for hidden costs. See consolidating and
- Switching home loans - Be aware that it may
take some time for you to recoup the costs of switching. See switching
- Accessing your super - You can only do this in
limited circumstances. This is a last resort and should only be
considered if it will save your home See getting super early.
If you have missed a repayment, it is
important to think further than just the next repayment. Put a plan
in place straight away so that you can afford your bills and get
back on track.
Last updated: 06 Oct 2017