Mortgage stress: struggling with repayments in WA
By Nathan Ellis · Updated 2026-07-19
Mortgage stress is when your home loan repayments take so much of your income that paying for everything else becomes hard. There is no single official definition, but it is often measured as repayments above 30% of a household’s pre-tax income. If you are struggling, the most important step is to contact your lender’s hardship team early. You have a legal right to ask for a hardship variation, and the lender must respond in writing within 21 days.
In WA, free help is available. The National Debt Helpline on 1800 007 007 connects you to a free financial counsellor, and Legal Aid WA runs a Mortgage Hardship Service through its Infoline on 1300 650 579.
What counts as mortgage stress
Mortgage stress has no one accepted definition, but the Australian Housing and Urban Research Institute says it is often described as paying more than 30% of household income in mortgage repayments (AHURI). Legal Aid WA describes it more simply: mortgage stress is when a household’s income does not cover its outgoings, including mortgage repayments.
Here is how the 30% measure works, calculated by Compare A Broker on a $600,000 loan at an illustrative 6.1% over 30 years:
| Household income before tax | 30% of income, per month | Repayment, per month | Share of income |
|---|---|---|---|
| $120,000 | $3,000 | $3,635.97 | 36% |
| $145,440 | $3,636 | $3,635.97 | 30% |
| $180,000 | $4,500 | $3,635.97 | 24% |
The 30% line is a rough guide, not a test. A household on a lower income can be under pressure below 30%, and a higher-income household may cope above it. What matters is whether you can pay the loan and your essential bills without falling behind.
Signs you may be heading into mortgage stress
The early signs of mortgage stress usually show up in your budget before you miss a repayment. Watch for these 4:
- You use credit cards or buy-now-pay-later for groceries and bills.
- Your savings or offset balance keeps falling to cover repayments.
- A direct debit for your mortgage has bounced, or nearly did.
- You are delaying other bills to make the mortgage payment.
Legal Aid WA warns that if a direct debit is dishonoured, no repayment is made at all and you are likely to be charged fees. If you cannot make the full repayment, contact your lender to arrange an amount you can afford, and do not cancel the direct debit without another payment arrangement in place.
How to ask for a hardship variation
A hardship variation is the main way out of mortgage stress when you cannot keep up. It is a change to your loan because you cannot meet your repayments for a reasonable cause, such as illness, unemployment or family violence. Under the National Credit Code, you can give your lender a hardship notice orally or in writing (National Credit Code, section 72). Moneysmart sets out 4 steps (Moneysmart):
- Contact your lender’s hardship officer.
- Give your loan details, including the account name and number and your current repayment.
- Say that you want to change your repayments because you are experiencing hardship.
- Explain why, how long you expect the problem to last, and how much you can afford to repay. Moneysmart’s budget planner can help you work that out.
Legal Aid WA lists changes you can ask for in a hardship variation (Legal Aid WA):
- lower repayments you can afford
- a longer loan term
- a pause on repayments for an agreed period
- a lower or frozen interest rate for a period
- time to sell your home
- waived default fees
Ask the lender how any pause or reduction changes the total you owe. Interest usually keeps running, so a pause or lower repayment can mean a higher balance later.
What your lender must do
A lender must follow set timeframes once a borrower in mortgage stress gives a hardship notice. The lender can ask for more information within 21 days, and you must provide it. It must then tell you its decision within 21 days of your notice, or within 21 days of receiving the information it asked for.
If the lender refuses, it must give reasons and tell you about the Australian Financial Complaints Authority (AFCA). If you have given a hardship notice, the lender generally cannot start enforcement until 14 days after it tells you it has not agreed to a change. The lender does not have to agree, especially if it believes you could not repay even with the change, so be realistic about what you can afford.
If your lender refuses and you are not satisfied, ask for its internal dispute resolution team first. If that does not resolve it, AFCA offers free, independent dispute resolution on 1800 931 678.
What happens if you fall behind on your mortgage
If mortgage stress turns into missed repayments, a lender must still follow set steps before it can take your home. Under the National Credit Code, it must give you a default notice allowing at least 30 days to fix the default before it begins enforcement. Moneysmart says the lender can send the notice as soon as a repayment is overdue, but may wait until it is 90 days or more overdue. In WA, Legal Aid WA refers to this as a Form 12 default notice.
After the 30 days, the lender can start legal action for the whole loan. If a court orders possession, a sheriff can evict you and change the locks, and Moneysmart notes this does not release you from the debt if the sale does not cover it. Legal Aid WA says the lender does not have to go to court, but usually does.
You can still apply for a hardship variation after receiving a default notice, and you can ask the lender to postpone enforcement. The lender must reply in writing within 21 days of a postponement request. If you receive a default notice, get free legal advice straight away.
When selling is the better option
If your situation is unlikely to improve, selling may be the better choice. Moneysmart says it is better to sell your home yourself than have a lender take possession and sell it. You are likely to get a better price and avoid legal costs passed on by the lender. Legal Aid WA notes you can ask for a hardship variation that gives you time to sell. Talk to a financial counsellor or get legal advice first, and tell your lender if you decide to sell.
Free help in WA
| Service | What it offers | Contact |
|---|---|---|
| National Debt Helpline | Free, confidential financial counselling | 1800 007 007 |
| Legal Aid WA Mortgage Hardship Service | Free legal information and help with mortgage stress | Infoline 1300 650 579 |
| AFCA | Free, independent disputes with your lender | 1800 931 678 |
| Beyond Blue | 24-hour support if money stress is affecting your mental health | 1300 22 46 36 |
Before paying any business to deal with your lender for you, try the free services above first.
Where refinancing and a broker fit
Refinancing can help if your interest rate is well above what lenders offer today. It is harder once you have missed repayments, because missed repayments can show on your credit report and new lenders check it.
If you are already behind, deal with your current lender’s hardship team first. Once your repayments are back on track, a broker can check whether a lower rate or a different structure would ease the pressure. Our guide on whether refinancing is worth it covers the costs, and 434 businesses are listed in our Perth mortgage broker directory.
Checked against Moneysmart, Legal Aid WA, the National Credit Code and AHURI on 26 September 2026. This is general information, not financial or legal advice. If you are in financial difficulty, contact your lender, the National Debt Helpline or Legal Aid WA.
Frequently asked questions
What is considered mortgage stress?
Mortgage stress is often described as spending more than 30% of pre-tax household income on mortgage repayments, though there is no single official definition. On a $120,000 income, a $3,635.97 monthly repayment is 36% of income.
What is a hardship variation?
A hardship variation is a change to your home loan because you cannot meet repayments for a reasonable cause, such as illness or unemployment. You can ask orally or in writing, and the lender must give you its decision within 21 days, or 21 days after receiving any information it requested.
How long does a lender have to respond?
Under the National Credit Code, the lender must respond within 21 days of your hardship notice. If it asks for more information, it must respond within 21 days of receiving it.
Can the bank take my house straight away?
Not straight away. The lender must first give you a default notice with at least 30 days to fix the default, and it usually goes to court before taking possession. Contact your lender and get free legal advice as soon as you receive a default notice.
Where can I get free help in WA?
Call the National Debt Helpline on 1800 007 007 for a free financial counsellor, or Legal Aid WA’s Infoline on 1300 650 579 for its Mortgage Hardship Service. AFCA on 1800 931 678 handles disputes with your lender.
Should I refinance if I am struggling with repayments?
Refinancing can lower repayments if your rate is uncompetitive, but it is harder once you have missed repayments. If you are already behind, ask your lender for a hardship variation first, then look at refinancing once your repayments are back on track.
Frequently asked questions
- Will my lender penalise me for asking about hardship?
- No. Lenders are required to have a hardship process, and using it doesn't automatically damage your credit file the way missed payments can. Contacting them early is generally viewed more favourably than going quiet and missing payments.
- What is a hardship variation?
- It's a temporary change to your loan, such as a repayment pause or reduced payments for a set period, agreed with your lender because of a genuine change in circumstances like job loss or illness. It's meant to be short-term, not a permanent fix.
- Should I refinance if I'm struggling to make repayments?
- It can help if the issue is your current rate rather than a temporary drop in income, but refinancing isn't approved instantly and isn't the right tool for an urgent cash flow problem. Talk to your lender about hardship options first if the situation is pressing.
- Where can I get free help if I'm not sure what to do?
- The National Debt Helpline offers free, confidential financial counselling and is a genuine starting point if you're unsure which option applies to your situation.