What Happens If You Miss a Mortgage Payment?

Missing a mortgage repayment is stressful, but it does not immediately trigger a crisis. Lenders in Australia follow a regulated process before taking any serious action, and there are real options available if you act quickly. The worst thing you can do is ignore the problem.

Day 1–14: You Miss the Repayment

If a direct debit fails or you miss a scheduled repayment, most lenders will send you an SMS or email notification within a few days. This is an automated alert, not a formal default. At this stage, the fix is simple: make the missed repayment as soon as possible. Call your lender if you need help understanding how to catch up.

Day 15–30: Initial Contact From the Lender

After approximately two weeks of non-payment, a lender representative will typically contact you by phone or letter. Their goal at this stage is to understand why the payment was missed and whether it is a temporary blip or a financial hardship situation. Be honest — lenders have an obligation under the National Consumer Credit Protection Act (NCCP) to consider your circumstances and offer hardship arrangements where appropriate.

30–60 Days: The Lender's Hardship Provisions Kick In

If you cannot immediately catch up, you can formally apply for hardship assistance. Under Australian law, all credit licensees (including banks) must have a hardship process and must genuinely consider your application. Hardship options include:

• Repayment pause: Temporarily stop or reduce repayments for a defined period (usually 1–3 months). Interest typically continues to accrue and is capitalised.
• Reduced repayments: Temporarily lower the repayment amount below the scheduled amount
• Loan term extension: Extend the remaining loan term to reduce the minimum repayment amount going forward
• Switching to interest-only: Temporarily move to IO repayments to reduce the minimum repayment amount

60+ Days: Default Notice

After 30 days of default (debt overdue by a specified amount), the lender must serve a Default Notice under the NCCP. The Default Notice gives you 30 days to either repay the arrears, apply for hardship assistance, or dispute the debt. You must receive this notice in writing before the lender can take further legal action.

After the Default Notice: Legal Action and Mortgagee in Possession

If the arrears are not resolved during the Default Notice period, the lender can apply to the courts for possession of the property. This does not mean immediate eviction — the court process takes time (weeks to months) and you have the right to respond. However, once a possession order is granted, the lender can appoint a mortgagee in possession and sell the property. See the Mortgagee in Possession guide for the full process.

Impact on Your Credit File

Missing repayments affects your credit file in two ways:

• Repayment history: Under comprehensive credit reporting (CCR), late or missed payments appear on your file for 2 years. Even one or two late payments are visible to future lenders.
• Default listing: A debt of $150+ overdue by 60+ days can be listed as a default on your file for 5 years, even if later paid.

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