With the cost of living rising and interest rates stubbornly high, many Australians are struggling to keep up with their mortgage repayments. The Australian Financial Complaints Authority (AFCA) has seen a 14 per cent increase in complaints related to financial difficulty in the past year, and a significant number of these complaints are about home loans. Natalie Cameron, Lead Ombudsman for Banking and Finance at AFCA, is urging those facing financial hardship to seek help sooner rather than later.
“Financial hardship can happen to anyone, often unexpectedly. It could result from job loss, a medical emergency, or other circumstances affecting your ability to meet obligations like loan repayments,” Cameron explains. “Our data shows a worrying trend: people are hesitant to ask for help, even when it’s available and could make a significant difference.”
According to Cameron, AFCA received 5,525 financial difficulty complaints in 2023-24, with a third of these related to home loans. As the Reserve Bank of Australia continues to keep interest rates high, many Australians find themselves in precarious financial situations. Despite this, a report from the Australian Securities and Investments Commission (ASIC) revealed that 30 per cent of people are reluctant to actively seek hardship assistance.
Cameron believes that this reluctance often stems from a lack of awareness about available options or the stigma associated with asking for help. “Let’s face it, asking for help can be hard. But it’s important to understand that lenders have systems in place to assist you. It’s not about deferring the inevitable if you truly can’t repay your debts. In many cases, a review of your situation could lead to adjustments that bridge the gap until you’re on more solid financial ground.”
Early Action Can Make a Difference
The key, according to Cameron, is early action. “The earlier you act, the more options will be available to you,” she advises. “Engaging with your lender early can help you manage your finances more effectively, prevent long-term consequences, and demonstrate your financial responsibility as you work to keep up with your payments.”
Banks and other lenders have various hardship assistance options designed to provide temporary relief, depending on your circumstances. These can include deferring loan repayments, checking that you’re on the best loan terms, capitalising missed repayments (adding them back onto the loan), or extending the loan term where appropriate.
“By seeking help early, you have the best chance of avoiding deeper financial trouble,” says Cameron. “Delaying action can lead to missed payments, additional fees, and a damaged credit history—not to mention the mental toll of spiralling debt.”
Protect Your Credit Score
One of the common misconceptions about asking for hardship assistance is that it will negatively impact your credit score. Cameron is keen to dispel this myth. “Contrary to popular belief, requesting hardship assistance does not hurt your credit score. In fact, your credit report will show that you maintained regular repayments under the new arrangements with your lender. That’s a positive for your credit score and a much better outcome than a missed payment.”
Cameron adds that while your credit report will note a hardship arrangement, it will not include the reason for it or any financial details. This information will be permanently removed after 12 months. If you apply for credit within those 12 months, a lender may simply ask more questions about your situation to ensure you won’t be put under new financial stress.
Don’t Wait to Ask for Help
“Facing financial stress can be challenging, but it can also bring relief when you take action,” says Cameron. “By asking for help early, you can benefit from tailored relief measures without worrying about your credit score. Proactively managing financial hardship can lead to a more stable and secure financial future—and fewer sleepless nights.”
Cameron also emphasises that if you don’t receive the help you expected, you have the right to complain to your lender and have your case reconsidered. “If you remain unhappy, you can come to AFCA as an independent ‘umpire’. Among other things, we can consider complaints related to credit and financial difficulty, including credit reports. Our service is free for consumers and small businesses, and in most cases, we will be able to work with you and the lender to reach an agreement. Failing that, we can make a final decision that, with your agreement, is binding on the lender.”
AFCA’s message is clear: Don’t wait to ask for help if you’re struggling with your mortgage. Acting early can make a world of difference, and the support available could be just what you need to get back on solid financial ground.
Where to Find Help
Cameron also points out that assistance is not limited to just what your lender can provide. “Help is also available from free financial counselling services, such as the National Debt Helpline on 1800 007 007 or at ndh.org.au,” she says. “These services can offer advice tailored to your specific situation, helping you understand your options and take the best course of action.”
As the financial landscape remains challenging, Cameron’s advice is more relevant than ever: “Don’t wait until you’re in over your head. Help is available, but you have to ask for it. The sooner you do, the more control you’ll have over your financial future.”
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