Homeowners financially affected by coronavirus

This is a guide for people with home loans who are owner-occupiers and may be experiencing financial difficulties due to the impact of coronavirus (COVID-19).


First step - speak to your lender

Many home loan providers, including banks and non-bank lenders, announced measures to support eligible customers impacted by coronavirus who may fall behind on their mortgage repayments. These measures included:

  • repayment deferrals of up to 6 months
  • fee waivers
  • offset account withdrawals at no cost

With the initial 6-month period over, many lenders are contacting borrowers to discuss options, including the possibility of an extension. 

If you've not been contacted, it's very important to get in touch with your lender to find out what your next steps could be.


Changing the terms of your home loan

In times of financial difficulty, changing the terms or conditions of your home loan could be worth considering. 

Hardship variation

One option is a hardship variation. This is a letter you submit to your lender that sets out your reasons for wanting to:

  • change the terms of your home loan, or
  • temporarily pause or reduce loan repayments 

To apply for a hardship variation, contact your bank or lender to find out what's required. Use the template in the link below to help write your letter. In most cases you'll need to include: 

  • the details of your home loan 
  • why you’re having trouble making payments 
  • how long you think you'll have trouble making payments 
  • how much you can afford to pay on your loan 

Once you've submitted a hardship variation letter and any documents requested, you'll generally get a response within 21 days. 

If your hardship variation application is refused 

Your bank or lender must provide a reason if your hardship request is refused. If you disagree with the outcome, you should contact their internal dispute resolution team in the first instance.

If you can’t come to an agreement with your bank or lender, get in touch with the Australian Financial Complaints Authority. The AFCA can provide guidance on:

  • independent dispute resolution
  • what to do before making a formal complaint
  • how to submit a complaint

Deferring repayments

If you choose to defer your home loan payments, the interest that builds up in the period you defer will usually be added to the home loan, so it may take you longer to pay off. 

Talk to your bank or lender to find out:

  • what their policy is and how any deferral might impact your loan balance before making any decisions 
  • whether deferring home loan payments will put you in arrears, as this can affect your credit rating and ability to borrow in the future

If you default on your home loan

Falling behind on your mortgage payments is known as being in default. If you can't agree on a revised payment plan with your bank or lender, they can take legal action to repossess your home. This could include:

  • issuing a default notice
  • filing a statement of claim
  • a court order to evict

Default notice

The process to repossess a home usually starts with a default notice. This can be sent the day your payment is overdue, but is most often sent when your payment is 90 days or more overdue.  

Lenders generally avoid sending a default notice, preferring to come to some sort of revised repayment schedule wherever possible.

If it does go ahead, the default notice gives you 30 days to make any missed payments.

You can still apply for a hardship variation during the default period. See Section 1: First step - speak to your lender for more details.

Statement of claim

If you didn’t pay the amount owed within the 30-day default notice period, or haven't made arrangements to do so, your bank or lender can file a statement of claim with the courts.

You’ll have 28 days to respond to the claim. Your options include: 

  • paying the amount owed 
  • filing a defence 
  • lodging a dispute with the Australian Financial Complaints Authority 

If you don’t respond within the 28 days, a default judgment may be made against you without you being notified. Having a judgment made against you can affect your credit rating.



If a default judgment is made against you, your bank or lender could then apply for a court order (also known as a writ) to take possession of your home. 

When a court order is made, you’ll receive a notice to vacate from the sheriff. This includes the date that the sheriff intends to carry out the eviction and change the locks.  

If you receive a notice to vacate, you’ll have a minimum of 30 days to leave your home. You may be able to apply for an extension of time or delay all action in certain circumstances, including if you're in: 

  • the process of selling the property 
  • refinancing talks with other lenders
  • severe financial hardship  

You may need to provide evidence if you're applying for an extension or a delay. 


Debt agreements and bankruptcy

If you’re evicted, you’ll still need to pay back your home loan.  

The bank or lender will usually try to sell your property to recover the amount they're owed. You’ll also be responsible for paying costs involved in selling your home. 

If you still owe money after the sale, your bank or lender may try to recover the remaining amount of the loan by: 

  • making a claim to sell your other assets, or
  • starting bankruptcy proceedings against you 

You also have the choice of: 

  • applying for a debt agreement, or 
  • filing for bankruptcy yourself 

Debt agreement 

A debt agreement is a formal arrangement between you and your creditors to pay back the debt over a certain period of time. 

A debt agreement is not the same as a debt consolidation loan or an informal repayment plan. 

Once you've signed a debt agreement: 

  • it's listed on your credit report for at least 5 years 
  • you're listed on the national personal insolvency index for at least 5 years 
  • you’ll have to tell new credit providers about the debt agreement if you owe more than the credit limit 
  • you may not be able to work in certain jobs 


Bankruptcy is an official declaration that you’re not able to pay your debts. You can file for bankruptcy yourself, or a creditor can start bankruptcy proceedings against you. In either situation, a trustee:

  • will be appointed to manage your bankruptcy
  • can sell any assets you have to help pay your debts

A bankruptcy usually lasts for 3 years and 1 day from the day it was filed. If you earn over a certain amount during that time, you may need to make compulsory payments to your trustee.

Being declared bankrupt means you won’t have to pay back most of your debts. However, you'll still be responsible for some debts, including:

  • child support and maintenance 
  • government student loans 
  • court imposed penalties and fines 
  • debts you incur after your bankruptcy begins 

Being declared bankrupt stays on your credit report for 5 years. Additionally:

  • you're listed on the national personal insolvency index permanently 
  • you can’t travel overseas without permission from your trustee 
  • you can't be a director of a company without court permission 
  • you may not be able to work in certain jobs

Help with managing your finances

Make a budget

If your income stops or is reduced, it may be hard to meet financial commitments.  

Budgeting is a practical way to see where you spend your money, and can help to: 

  • get a clearer picture of your overall financial position, which can make you feel more in control 
  • prepare you for unexpected expenses 
  • spot areas where you can cut back spending and save money 

Get financial support

There is temporary financial support for people affected by coronavirus. Depending on your situation, you may be able to get:

Energy costs

If you're having difficulty paying your utility bills, contact your energy retailer directly about setting up a hardship arrangement or payment plan. 

There are many rebates available to eligible customers that can help reduce energy bills, including electricity and gas rebates for: 

  • retail customers (if you get your bill from an energy retailer) 
  • on supply customers (if you get your energy bill or invoice from a strata manager or community/village operator)

No interest loans

Good Shepherd is working with the Federal Government and NAB to offer 24-month interest free household relief loans for those affected by coronavirus.

Loans of up to $3000 to pay for rent, bond and utilities, with no interest, charges or fees.

You can call the free COVID hardship support hotline on 1300 121 130 or apply online.

Financial Information Service

This is a free, confidential service where you can talk to a Financial Information Service Officer from the Federal Government about:

  • financial products including superannuation and investments
  • financial planners and how to use their advice 
  • the benefit of reducing your debt
  • how to increase your retirement income

Financial support

  • Guidance to help you pay council rates, bills and fines at Moneysmart   
  • Claim expenses if you're working from home during the coronavirus at the ATO 
  • Learn how to plan and make a budget at Moneysmart

Financial counselling


Mental health support and legal advice

As well as your financial situation, coronavirus (COVID-19) can also impact your physical and mental wellbeing. 

Depending on what discussions you're having with your bank or lender regarding changes to your home loan repayments, you may also need to obtain legal advice.

Mental health support

Legal services

Top of page