Mortgage stress is becoming a real concern for Australian households. Here’s how to recognise the warning signs, understand your options and find ways to take back control of your home loan.

For many Australians, owning a home is one of life’s biggest achievements. But when mortgage repayments, rising household expenses and everyday living costs start taking up more of your income, that achievement can begin to feel like a financial burden.

If you’re finding it harder to keep up with your mortgage repayments, using savings to cover everyday expenses or constantly worrying about your next repayment, you’re not alone.

Mortgage stress can affect homeowners at different stages of life. Whether you’ve recently purchased your first home, upgraded to accommodate a growing family or have been paying off your mortgage for years, changes in interest rates, household income and the cost of living can put pressure on even the most carefully planned budget.

The good news? There may be options worth exploring.

Understanding your current home loan, reviewing your financial position and knowing where to seek help can be an important first step towards getting back on track.

At Two Birds One Loan, we believe that good mortgage advice starts with understanding your circumstances, not simply finding you another loan.

What is mortgage stress?

Mortgage stress generally describes a situation where a household is struggling to comfortably meet its home loan repayments alongside other essential living expenses.

There isn’t one universal definition of mortgage stress. However, a commonly used measure is when a household spends more than 30% of its gross income on housing costs and falls within the lower 40% of household incomes.

But mortgage stress isn’t just about percentages.

You might be experiencing mortgage stress if:

• Your mortgage repayments are taking up an increasing portion of your household income.
• You’re relying on credit cards or personal loans to cover everyday expenses.
• You’re dipping into savings to make your home loan repayments.
• There’s very little left after paying your mortgage, groceries, utilities and other bills.
• You’re finding it difficult to manage unexpected expenses.
• You’re worried about upcoming interest rate changes or further increases in repayments.

You don’t need to have missed a mortgage repayment to be experiencing financial pressure.

Recognising the warning signs early can give you more time to understand your options.

Why are Australian homeowners feeling the pressure?

For many households, it’s not one single expense causing the problem. It’s the combination of several financial pressures happening at once.

1. Higher home loan repayments

Interest rate changes can have a significant impact on household budgets, particularly for borrowers with variable-rate home loans.

Even a relatively small change in your interest rate can increase your monthly repayments. For homeowners already operating on a tight budget, that extra cost can make a noticeable difference.

2. The rising cost of living

Mortgage repayments are only one part of the household budget.

Groceries, electricity, insurance, fuel, childcare, school expenses and other everyday costs can all add up.

When these expenses increase, there may be less money available to comfortably service your mortgage.

3. Changes in household income

Redundancy, reduced working hours, parental leave, illness, separation or changes to self-employment income can quickly affect your ability to meet regular repayments.

Even households that were previously comfortable financially can find themselves under pressure when circumstances change.

4. Multiple debts and financial commitments

Credit cards, car loans, personal loans and buy-now-pay-later commitments can place additional pressure on household cash flow.

When several repayments are due throughout the month, managing everything can become increasingly difficult.

Struggling to pay your mortgage? Here are 6 steps worth taking

If your home loan is becoming difficult to manage, ignoring the problem rarely makes it easier.

Here are six practical steps to consider.

1. Understand exactly where your money is going

Before making any major financial decisions, take a closer look at your current household budget.

Start by listing:

• Your total household income.
• Your current mortgage repayments.
• Credit card and personal loan repayments.
• Essential household expenses.
• Insurance, utilities and other regular commitments.
• Any savings or emergency funds available.

Understanding your cash flow can help identify where the pressure is coming from and what you may realistically be able to afford.

It also gives you a clearer picture when speaking with us. Click here to access our Budget & Savings Tracker.

2. Review your current home loan interest rate

When was the last time you reviewed your mortgage?

Many homeowners set up their home loan when they purchased their property and then continue making repayments without checking whether their loan remains competitive.

However, your circumstances, property value and the lending market may have changed since you first took out your mortgage.

A home loan review can help you understand:

• Whether your current interest rate is competitive.
• Whether your lender has other suitable loan options.
• Whether your loan structure still meets your needs.
• Whether there are unnecessary fees or features you’re paying for.
• Whether refinancing could be worth exploring.

A lower interest rate may reduce your repayments, depending on your loan balance, remaining term, fees and repayment structure.

It’s important to look beyond the advertised interest rate and compare the overall cost of the loan. Review you Rate, get started here.

3. Speak to your lender if you’re struggling with repayments

If you’re already finding it difficult to make your mortgage repayments, contact your lender’s financial hardship team as soon as possible.

You don’t need to wait until you’ve missed a repayment to ask for assistance.

Depending on your circumstances, your lender may be able to consider options such as:

• Temporarily reducing your repayments.
• Pausing repayments for an agreed period.
• Changing your loan term.
• Establishing an alternative repayment arrangement.

These options are not automatic and will depend on your circumstances and the lender’s assessment.

Under Australian financial hardship rules, lenders must consider requests for hardship assistance and respond within the applicable timeframe. ASIC’s Moneysmart guidance explains that lenders generally need to provide a response within 21 days.

Remember that temporarily reducing or pausing repayments can increase the total interest you pay or leave you with higher repayments later. Make sure you understand the longer-term implications before agreeing to an arrangement.

• National Debt Helpline: 1800 007 007 – free financial counselling.

• Moneysmart: Mortgage problems and financial hardship.

4. Consider whether refinancing could help

Refinancing your home loan involves replacing your existing mortgage with a new loan, usually with another lender.

For some homeowners, refinancing may provide an opportunity to access a more competitive interest rate, change loan features or restructure their repayments.

However, refinancing isn’t suitable for everyone.

Before making a decision, consider:

• Your current interest rate and remaining loan term.
• Your outstanding mortgage balance.
• Your property value and available equity.
• Your income and employment circumstances.
• Your credit history and existing financial commitments.
• Any exit fees, application costs or refinancing expenses.

If you’ve already fallen behind on repayments or are experiencing financial hardship, refinancing may be more difficult. A new lender will assess your financial circumstances and ability to service the proposed loan.

In this situation, speaking with your existing lender’s hardship team should generally be your first step.

5. Look at your other debts and financial commitments

If you’re juggling a mortgage alongside several other debts, it may be worth reviewing the bigger financial picture.

In some circumstances, consolidating eligible debts into a home loan may simplify repayments or improve short-term cash flow.

For example, combining certain personal loans or credit card balances into a mortgage may reduce the amount of money required in regular repayments.

However, there is an important consideration.

A mortgage generally has a much longer repayment term than a credit card or personal loan. Moving short-term debt into a longer-term home loan can mean paying considerably more interest over time.

Debt consolidation should never be viewed as an automatic solution to mortgage stress. It needs to be assessed carefully, including the impact on your overall debt, loan balance and long-term financial position.

6. Get the right support early

Financial pressure can feel overwhelming, particularly when you’re trying to manage a mortgage, family commitments and everyday expenses at the same time.

You don’t have to work through everything on your own.

Depending on your circumstances, useful support may include:

• Your lender’s financial hardship team.
• A qualified mortgage broker (us) who can review suitable home loan options.
• A free, independent financial counsellor.
• A financial adviser or accountant where broader financial advice is needed. We can recommend our trusted partners if required.

The important thing is to understand which type of support is appropriate for your situation.

Can a mortgage broker help if you’re experiencing mortgage stress?

Yes, a mortgage broker can help you understand your existing home loan and explore whether there are more suitable lending options available.

A mortgage broker can review your current interest rate, loan structure, repayments and financial circumstances before discussing potential alternatives.

Depending on your situation, this may include:

• Home loan reviews

Reviewing your current mortgage to see whether your interest rate, features and loan structure remain competitive.

• Refinancing options

Comparing suitable home loan products across different lenders to determine whether refinancing could improve your overall position.

• Loan restructuring

Exploring available loan structures and repayment options that may better align with your circumstances and financial goals.

• Equity release

If you have sufficient equity and meet the lender’s eligibility requirements, accessing property equity may be an option for certain planned expenses. This needs to be assessed carefully, particularly if you’re already experiencing financial pressure.

• Debt consolidation

Assessing whether consolidating eligible debts could simplify repayments, while considering the longer-term interest costs and risks.

It’s important to understand that a mortgage broker cannot guarantee approval, a lower interest rate or a reduction in repayments. Any proposed lending solution needs to be suitable for your financial circumstances.

If you’re unable to meet your current repayments, your lender’s hardship team and an independent financial counsellor may be the more appropriate starting points.

Is refinancing always the answer to mortgage stress?

No. And this is something worth understanding before making any decisions.

While refinancing can be beneficial in certain circumstances, it isn’t always the right solution.

For example, if your household income has reduced, you’ve recently lost employment or you’re already behind on your mortgage, a new lender may be unable to approve a refinance.

In these situations, negotiating a temporary hardship arrangement with your existing lender may be more appropriate.

The goal shouldn’t simply be to find a lower interest rate.

It should be to find a realistic way forward that considers your current circumstances, immediate cash flow and longer-term financial wellbeing.

Mortgage stress: where can Australians get help?

If you’re struggling with your home loan repayments, there are several Australian services that provide practical support.

ASIC Moneysmart

Moneysmart provides independent information about mortgage problems, financial hardship, budgeting and managing debt.

Website: https://moneysmart.gov.au

National Debt Helpline

The National Debt Helpline offers free, confidential financial counselling for Australians experiencing financial difficulties.

Phone: 1800 007 007

Website: https://ndh.org.au

Your lender’s financial hardship team

Contact your existing bank or lender and ask to speak with its financial hardship team. They can explain the assistance options available under their hardship process.

Seeking assistance early is important, particularly if you’re concerned about falling behind on repayments.

Frequently asked questions about mortgage stress

What should I do if I can’t afford my mortgage repayments?

Contact your lender’s financial hardship team as soon as possible. Explain your circumstances, what you can realistically afford and whether you expect your financial difficulties to be temporary or ongoing. You can also seek free independent financial counselling through the National Debt Helpline.

Can a mortgage broker help me get a lower interest rate?

A mortgage broker can review your existing home loan and compare suitable products from different lenders. Depending on your circumstances, refinancing or negotiating with your existing lender may be worth exploring. However, a lower rate isn’t guaranteed and the overall loan costs should always be considered.

Should I refinance if I’m struggling financially?

Not necessarily. Refinancing may be an option if you meet a new lender’s eligibility and serviceability requirements. If you’re already experiencing financial hardship or have missed repayments, contact your existing lender’s hardship team first.

Can I consolidate my credit card debt into my mortgage?

It may be possible if you have sufficient available equity and meet the lender’s eligibility requirements. However, consolidating short-term debt into a long-term mortgage can increase the total interest paid. It’s important to understand the costs and risks before proceeding.

When should I review my home loan?

It’s worth reviewing your home loan regularly, particularly when your financial circumstances change, your fixed-rate period ends, interest rates move or you feel your repayments are becoming difficult to manage.

Does asking my bank for hardship assistance affect my credit score?

A financial hardship arrangement does not, by itself, reduce your credit score. However, hardship arrangements can be recorded on your credit report for a limited period. Speak with your lender or a financial counsellor if you’re concerned about how this may affect your credit history.

Your mortgage shouldn’t be something you lose sleep over

At Two Birds One Loan, we understand that everyone’s financial circumstances are different.

Sometimes you need a fresh set of eyes on your home loan. Sometimes you need to understand whether refinancing is worth considering. And sometimes you simply need someone to explain your options and help you work out where to start.

As an award-winning, female-led mortgage and finance brokerage, we work with more than 60 lenders to help Australians explore home loan and finance solutions that suit their individual circumstances.

We believe in clear communication, genuine advice and building relationships that last well beyond settlement.

If your mortgage is feeling heavier than it should, let’s have a conversation.

No judgement. No pressure. Just practical guidance and a clearer picture of your options.

Talk to Two Birds One Loan today about a home loan review. Click here to book a meeting.

Serving homeowners across Sydney, the Hills District, Castle Hill, Glenorie and Australia Wide.

Disclaimer: This article is general information only and does not take into account your personal financial circumstances, objectives or needs. It is not legal, tax, financial or credit advice. Lending eligibility, interest rates, repayments and hardship assistance are subject to lender assessment and individual circumstances. Consider seeking independent financial or legal advice where appropriate.