If the Reserve Bank lifts rates on 29 September, a typical variable loan will cost about $162 a month more for every $1 million owed (here’s the full breakdown). For a lot of households that’s manageable. For some, it’s the rise that tips the budget over.
If that’s you, the single most useful thing I can tell you is this: act before you miss a payment, not after. While your repayment record is clean, almost every option is still open. Once arrears show up on your credit file, many of them close.
Options while your record is still clean
None of these need a hardship arrangement, and none leave a mark on your credit file:
- Ask your lender for a better rate. Many banks keep sharper “retention” pricing for customers who ask. A five-minute call is worth making before anything else.
- Refinance. If your rate is well above what lenders offer new customers, switching can cut repayments immediately. When refinancing is actually worth it.
- Stretch the loan term, with your eyes open. Resetting a $600,000 loan at 6.5% from 25 years remaining to 30 years cuts repayments by about $259 a month. But run to the end, it adds roughly $150,000 in interest. It’s a breathing-space tool, not a free saving.
- Lean on your buffer. Money in an offset or redraw can bridge a tight few months. Just treat it as a stopgap and have a plan for when it runs out.
- Look at your other debts. Car loans, credit cards and buy-now-pay-later often cost more each month than the rate rise itself. Consolidating them can lower monthly outgoings, but rolling a five-year car loan into a 30-year mortgage can cost more overall. See the total cost before you decide.
If you can’t keep up: asking for hardship help
If your income has dropped or costs have jumped because of something like job loss, illness, reduced hours or a relationship breakdown, the National Credit Code gives you the right to ask your lender to change your loan. You can ask by phone or in writing. Ask for the hardship team, and say clearly that you’re making a hardship request.
Depending on your situation, a lender might offer:
- a pause or reduction in repayments for a set period
- interest-only repayments for a while
- a longer loan term
- adding missed repayments to the loan balance
How long the lender has to respond
If your lender has enough information, it has 21 days to tell you its decision. If it needs more, it has 21 days to ask, then 21 days from when you provide it. The answer must be in writing, and if it’s a no, the lender has to explain why.
A pause isn’t a holiday
Interest usually keeps running during a repayment pause and is added to your balance. It buys time, which can be exactly what you need, but the loan grows while it’s in place. Ask the lender to show you the balance at the end of the arrangement.
What it does to your credit file
A hardship arrangement is recorded on your credit report as “financial hardship information”. It stays for 12 months, it can’t be used to calculate your credit score, and the reason for it isn’t shown. Missed repayments without an arrangement are different: they do hurt your score. That’s why asking early beats hoping it sorts itself out.
If the answer is no
Make a complaint to the lender first. If that doesn’t resolve it, you can go to the Australian Financial Complaints Authority (AFCA), which is free. The National Debt Helpline (1800 007 007) connects you with free financial counsellors who negotiate with lenders every day.
Where I can help, and where someone else is better
While your repayments are up to date, I can compare your rate against 40+ lenders, check whether refinancing or restructuring makes sense, and do the legwork. If you’re already behind, a free financial counsellor is usually the better first call. I’ll tell you honestly which one fits.
Common questions
Will asking for hardship help hurt my credit score?
No. A hardship arrangement is listed on your credit report for 12 months as financial hardship information, but it cannot be used to calculate your credit score and the reason is not shown. Missed repayments without an arrangement do affect your score.
How long does my lender have to respond to a hardship request?
21 days if it has enough information to decide. If it needs more, it has 21 days to ask for it, then 21 days from when you provide it. The decision must be in writing, with reasons if it says no.
Can I refinance while I have a hardship arrangement?
It is harder. Most mainstream lenders want a clean recent repayment history, so refinancing is usually easiest before any arrears or hardship arrangement. If refinancing could solve the problem, look at it first.
Is extending my loan term a good idea?
It lowers repayments but costs more interest over the life of the loan. For example, resetting a $600,000 loan at 6.5% from 25 to 30 years saves about $259 a month but adds roughly $150,000 in interest if run to the end. It can be a sensible short-term tool if you plan to pay extra later.
Sources: Legal Aid WA, CreditSmart, Moneysmart. Repayment figures are estimates for principal-and-interest loans. General information only, not financial or credit advice. Current at 24 September 2026.
