Mortgage hardship letter: how to ask your lender for help (Australia)

If your circumstances have changed and you can not keep up with your home loan repayments, or soon will not be able to, you can ask your lender for help. The request has a name in Australian credit law: a hardship notice. Putting it in writing, clearly, is the quickest way to get a decision and to record the date you asked.

What a mortgage hardship request is

A home loan for a home you live in, or for a residential investment property, is a credit contract covered by the National Credit Code. Under section 72 of the National Credit Code, a borrower who can not meet their repayments can give the lender a hardship notice asking for the loan to be changed. A loan taken mainly for business purposes is not covered.

ASIC’s guidance is that once your lender has the information it needs, it has 21 days to tell you its decision. It may ask you for information first, such as payslips, bank statements or a letter from your employer.

What you can ask for

Lenders consider each request on its facts. Common requests include:

• a pause on repayments for a few months;
• lower repayments for a while;
• interest-only repayments for a while;
• a longer loan term, so each repayment is lower;
• time to catch up on missed repayments.

If you are not sure what to ask for, you can ask the lender what help it can offer. What matters is that your request matches what you can realistically afford.

What to put in the letter

1. Your loan details: the lender, the home loan account number and the names on the loan.
2. What changed, and when: for example losing work, reduced hours, illness, a separation, a new baby or a disaster, and how long you expect it to last.
3. Your situation in numbers: what comes in now, your home loan repayment and your other essential costs. Rough figures are fine.
4. The help you want, and what you can afford to pay for now.
5. The right words: ask the lender to treat the letter as a hardship notice under section 72 of the National Credit Code.
6. Any earlier contact: if you have already called, say when and what you were told.

Keep it calm and honest. A hardship request is a request for help, not a complaint, and it reads best without threats.

Ask early

A written request sent before the arrears build up gives your lender time to consider help, and it records the date you asked. If you have already received a default notice, it will give a date to fix the arrears, so send your request as soon as you can.

Free help

The National Debt Helpline offers free, confidential help with money and debts on 1800 007 007 (weekdays 9.30 am to 4.30 pm), or at ndh.org.au. A financial counsellor can help you work out what to ask for and talk to your lender with you.

If your lender says no

If you can not reach an agreement, you can complain to the lender, and then to the Australian Financial Complaints Authority (AFCA), the free external dispute scheme for banks and lenders. Claim Done can draft a Bank, Loan and Credit Complaint to AFCA.

Have the letter drafted for you

Claim Done drafts a Mortgage Hardship Letter to Your Lender from a few quick answers for a flat $29. It sets out what changed, your numbers if you want them included, the help you are asking for and what you can afford, and it asks your lender to treat it as a hardship notice under section 72 of the National Credit Code. You read it first, then we email it for you or you download it and send it yourself.

Start my mortgage hardship letter →

This guide is general information, not legal or financial advice. Claim Done is not a law firm. Your lender decides each hardship request on its facts.