Financial Hardship: How to Stay in the Fight (and Win Back Control)

Key Takeaways

• Financial hardship can happen to anyone. Acting early with a clear plan keeps options open and protects your credit score and future borrowing power.
• Call your lender's hardship teams as soon as loan repayments get tight. They're required to assess reasonable Financial Hardship Assistance requests.
• Practical relief options include hardship variation, reduced home loan repayments, interest-only periods, loan term extensions, payment pauses, and debt restructuring.
• Keep records, stay calm, and keep paying what you can. It shows goodwill and limits arrears, fees, and interest rates impacts.
• Mountway can help you structure a strong hardship support request now and map your path back to financial health later.

Hardship Happens — It's How You Respond That Matters

Loss of income, illness with a medical certificate, divorce, Natural disasters, or the Rising cost of living can knock anyone off course. Financial hardship doesn't mean you've failed — but how you handle it determines how quickly you bounce back.

There's a right way to respond: early action, a simple plan, and clear communication. And there's the wrong way: fear, denial, and letting things snowball. Here's your no-fluff guide to managing hardship assistance and keeping your future intact.

What Is Financial Hardship?

Financial hardship is when you can't meet your debt or home loan repayments due to circumstances outside your control, like job loss, health issues, family breakdown, or Natural disasters. It doesn't make you a bad borrower. But ignoring it makes it worse.

Hardship support exists to help you stabilise and reset. The earlier you ask for Financial Hardship Assistance, the more options you'll have and the better protected your credit score will be.

What Happens If You Don't Act Early?

If you freeze, things can escalate quickly. Missed loan repayments may hit your credit file and lower your credit score. Defaults make future home loan or credit card approvals harder and more expensive. Fees and interest rate charges can compound, growing your balance. In the worst cases, you could face repossession. Early communication with your lender's hardship teams almost always leads to better outcomes and more flexibility.

What Help Is Available?

There are several practical tools that can reduce pressure and buy you time to recover.

• Hardship variation: Lenders can temporarily reduce repayments, switch your home loan to interest only, or extend your loan term to lower your monthly commitment.
• Payment pauses: Some lenders may allow a repayment pause for a set period, depending on your situation. This can provide breathing room while you get back on your feet.
• Debt restructuring: Consolidating multiple debts, refinancing a home loan, or restructuring a credit card can simplify payments and improve cash flow.
• External support: Free, independent financial counsellors can help you budget, prioritise debts, and prepare hardship assistance requests. The National Debt Helpline offers guidance, and the Australian Financial Complaints Authority is available if you need dispute resolution with your lender.
• Bank obligations: Every bank has hardship teams and, under Australian law, they're required to consider reasonable hardship support requests fairly — but you need to reach out early and explain your financial position clearly.

How to Approach Your Lender (Without Shooting Yourself in the Foot)

Treat this like a calm, professional process. A simple, well-structured request goes a long way.

• Prepare a hardship application: Explain the cause, show the impact on your financial position and budget, and outline a path to recovery — even if it's rough or time-based. If illness is involved, attach a medical certificate to support your case.
• Stay professional, not emotional: This is a business conversation. Clear facts help the lender help you.
• Keep paying what you can: Even a small weekly or fortnightly amount shows goodwill and limits your arrears and interest rates costs.
• Document everything: Save emails, note dates and names from calls, and keep copies of agreements. A clean paper trail protects you and supports any future dispute resolution or AFCA complaint, if needed.

Mountway's Hardship Game Plan

When our clients hit a rough patch, we step in early and stay with them through the recovery:

• Structure: We help you frame a strong hardship variation or assistance request with the right detail and supporting documents.
• Negotiate: We liaise with lenders' hardship teams to secure temporary relief that matches your situation, whether that's interest-only periods, reduced home loan repayments, or a short payment pause.
• Rebuild: We plan your post-hardship path — from catching up on arrears to improving your credit score and, when appropriate, refinancing your home loan to a better fit or consolidating a credit card.

Hardship isn't the end of the game — it's a chapter. Handled right, you can come back stronger and more confident.

Tough Times Don't Last — Smart Operators Do

Financial hardship isn't weakness. Hiding from it is. If you're feeling the squeeze from the Rising cost of living or a sudden setback, let's tackle it early and set you up for a reset that protects your future.

Ready to steady the ship? Book a chat with our team and we'll map your options, step by step.