Financial Hardship Arrangements: What Every Homeowner Should Know

The Reserve Bank’s recent rate cuts have given some welcome relief, but many Australian households are still doing it tough. In fact, ASIC reported in June 2024 that nearly half of adults with debt (47%) struggled to make repayments over the previous year. Cost-of-living pressures, reduced incomes and unexpected expenses have stretched family budgets to the limit.

If you’ve found yourself in this situation, you’re not alone. More Australians are now turning to their lenders for formal financial hardship arrangements—a tool designed to help you through a rough patch without defaulting on your loan.

What is a Financial Hardship Arrangement?

A hardship arrangement is an agreement with your lender to temporarily change your repayments. This may mean reduced payments, a repayment pause or an extension, depending on your circumstances—such as illness, job loss, family breakdown or sudden expenses. It’s a way of giving yourself breathing space to get back on your feet.

How Does It Affect Your Credit Report?

Since July 2022, hardship information is shown on your credit report for 12 months from the end of the arrangement. Importantly:

• It does not lower your credit score.

• Lenders will see that you entered hardship, and they may ask extra questions if you apply for a loan within 6–12 months.

• If you stick to the agreed plan, your credit health remains intact.

The bigger risk is missing payments without an arrangement, which can lead to defaults that stay on your file for five years.

Why Asking for Help is Better Than Silence

A hardship arrangement is always better than falling behind unnoticed. Defaults are long-lasting and make borrowing in the future much harder. By contrast, a hardship note shows that you acted responsibly.

ASIC’s research also shows that two-thirds of Australians who sought help from their lender felt supported and relieved afterwards. The process is there to protect you—it’s not something to be ashamed of.

Key Takeaways

✅ Hardship arrangements don’t reduce your credit score, provided you meet the new terms.
✅ Lenders may apply extra scrutiny within the first 12 months after hardship, but you are not automatically excluded from borrowing.
✅ After 12 months, the hardship note disappears if repayments are up to date.
✅ Acting early is always better than ignoring the problem.

A Final Note

If your repayments feel like a struggle—or you’ve gone more than 12 months without reviewing your loan—it may be time for a fresh look at your finances. Don’t wait until it becomes overwhelming.

📞 Reach out today and let’s explore the smarter solutions available to you. Sometimes the best step forward starts with a simple conversation.