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Mortgage stress handbook

8. Do I need to consider selling my home?

This is the hardest decision. You need to consider selling your home when:

  • You cannot afford your loan repayments and
  • You will be unable to afford your loan repayments for some years to come

You need to make this decision as early as possible because: it is better to sell your home yourself rather than have the lender sell the home for you. You are more likely to get a better price for your home and avoid lots of legal costs if you sell your own home. The decision whether to sell your home is most difficult when:

  1. You are unemployed and trying to get a job, or
  2. You are ill and trying to get well but you just don’t know when you will be sufficiently recovered, or
  3. You are waiting for a compensation payment.

In these situations you are hoping that you can make the loan repayments soon but you don’t know when this will happen. The difficulty is that as time goes on things are going to get worse and you will get further and further behind on your loan repayments and incur lots of extra interest.In these circumstances, it is recommended that you:

  1. Make a repayment arrangement with the lender for up to 6 months;
  2. If by the end of the 6 months you still cannot make the loan repayments, you should put your home on the market;
  3. Go back to the lender and negotiate a further arrangement on the basis that you are selling your home.

Remember Remember

If you get a job, get well or get a large lump sum of money before your home sells, you still have the option of trying to negotiate a further arrangement on the basis you can now pay the loan although this will be more difficult if the lender has obtained a court judgment.

By when do I have to make a decision?

You need to make a decision to sell your home as early as possible and preferably BEFORE the lender commences any legal proceedings. It is never too late to ask for time to sell, but the lender is less likely to agree later in the enforcement process and enforcement costs will be added to your loan as the legal proceedings progress.

You should consider putting your house for sale when you ask for hardship. You can always withdraw your home for sale if your situation improves.

You need to give yourself as much time as possible to sell your home and get a good price for it.

I’ve decided to sell my home. What do I do now?

Step 1

You need to place your home on the market. You need to price the home realistically so that it will sell but for the best price possible in the circumstances. If you are using a real estate agent you should explain what time frame you need to sell the home within. This will usually be under 6 months but could be under 3 months depending on what arrangement you make with your lender.

Step 2

You need to give copies of evidence that you are selling your home to the lender. This evidence should include (where available):

  1. A copy of the contract with your real estate agent
  2. Evidence that you are advertising your home
  3. The front page of the contract of sale
  4. Your marketing plan for selling the home

Step 3

Negotiate a repayment arrangement on the grounds of financial hardship with your lender. See Chapter 5.

You are negotiating the arrangement on the basis that:

  1. You are in financial hardship
  2. You can make regular repayments of what you can afford until the home is sold
  3. You have a reasonable time to exchange contracts for the sale of your home (ask for 6 months but you may need to consider agreeing to 3 to 4 months)
  4. When the home is sold your loan will be repaid.

Step 4

If you sell the house you need to notify the lender as soon as possible and provide evidence of the sale.


You should lodge a complaint with the complaint resolution scheme, AFCA, immediately if:

  • you are unable to make a repayment arrangement with the lender or
  • the lender is threatening to commence legal action or
  • the lender has issued you with a Statement of Claim or Summons but has not obtained a court judgment
  • You have lodged a defence in court but have not taken a (significant) step beyond that. (If in doubt, lodge your complaint to AFCA anyway, then get advice).

Remember Remember

The complaint resolution scheme, AFCA, is free and lodging stops all legal action while AFCA considers your hardship complaint.

What if my home is worth less than the amount of my loan?

If you think your home may be worth less than the amount you owe on your home loan, get legal advice.