If You Are Struggling with Mortgage Payments: Your Options

Financial stress can arrive quickly and from many directions: a job loss, a health setback, a relationship change, or simply the cumulative pressure of rising costs. If you are finding it difficult to meet your mortgage repayments, it is important to know that you are not without options, and that acting early puts you in a significantly stronger position than waiting until you have missed multiple payments. At Chaperone, we want to make sure borrowers understand what support is available and how to access it.

Contact Your Lender Before You Miss a Payment

The single most important thing you can do when you sense financial difficulty ahead is to contact your lender proactively. Lenders in New Zealand are required under the Credit Contracts and Consumer Finance Act (CCCFA) to treat borrowers experiencing financial hardship with fairness and consideration. They have dedicated hardship teams and established processes for working with borrowers in difficulty, but those processes work best when the conversation starts early.

Waiting until you have missed payments, or avoiding contact altogether, limits your options and can have lasting consequences for your credit file. Most lenders would rather work with you to find a solution than pursue a default process, which is costly and time-consuming for everyone involved.

Hardship Arrangements Your Lender May Offer

Depending on your circumstances and the nature of the difficulty, lenders may be willing to consider a range of arrangements, including:

• A temporary reduction in repayment amounts for a defined period
• A repayment holiday, where payments are paused for a short time while interest continues to accrue
• An extension of the loan term, which reduces each repayment but increases total interest costs over time
• Capitalising missed payments onto the loan balance under a formal agreement
• Switching from principal and interest repayments to interest-only for a temporary period

These arrangements are not permanent solutions, but they can provide breathing room while your financial situation stabilises. Any arrangement should be documented in writing, and it is worth understanding exactly what happens at the end of the hardship period, including how the deferred payments are treated.

Selling or Restructuring

If the financial difficulty is likely to be prolonged rather than temporary, it may be worth considering whether your current property and mortgage are sustainable over the longer term. In some situations, selling voluntarily while your equity is intact is a better outcome than waiting until a lender takes enforcement action. Selling gives you control over the timing and process, and means you walk away with any remaining equity rather than losing it through a mortgagee sale, which typically achieves a lower price.

Refinancing to a different lender or restructuring your mortgage may also be worth exploring, particularly if a new structure or rate reduces your monthly obligations to a more manageable level. A mortgage adviser can help you assess whether this is a realistic option given your current financial position.

Free Support Services in New Zealand

If you are struggling, financial mentoring services are available at no cost through MoneyTalks (0800 345 123), a free helpline funded by the government. MoneyTalks can connect you with a financial mentor who can help you assess your situation, understand your options, and communicate with creditors including your lender.

Community law centres can also provide free legal advice if you are concerned about your rights or the terms of any hardship arrangement your lender proposes. Citizens Advice Bureau is another accessible starting point if you are unsure where to turn.

Protecting Your Credit File

One concern many borrowers have when facing financial difficulty is the impact on their credit record. Missed payments and default listings can affect your ability to borrow in the future. The earlier you engage with your lender and formalise a hardship arrangement, the more likely it is that your credit file will be protected. Lenders are not required to list a hardship arrangement as a default, particularly when it has been agreed in advance.

At Chaperone, we understand that mortgage stress is deeply personal. If you are in difficulty or concerned about what lies ahead, reaching out for help is a sign of sound judgment, not weakness. The sooner you act, the more options you will have.