Can You Get a Home Loan After a Financial Hardship Arrangement?

Getting a Home Loan After a Financial Hardship Arrangement

A financial hardship arrangement does not automatically stop you from getting a home loan, but it can make the application more sensitive.

Some lenders may still consider your application if the hardship arrangement has ended, your repayments are back on track and you can show clean conduct after the arrangement. Others may want more time to pass, stronger evidence of full repayments, a larger deposit or a clear explanation of what happened.

This matters because hardship arrangements can now appear in credit reporting information.

You may not have a default. You may not have missed payments in the way people usually think about bad credit. But if a lender sees financial hardship information, they will usually want to understand whether the issue has been resolved and whether the new home loan is affordable.

This guide explains how Australian lenders may assess home loan applications after financial hardship, based on current policy research.

Related research: Can You Get a Home Loan Soon After Financial Hardship?

Can you get a home loan after financial hardship?

Yes, you may be able to get a home loan after financial hardship.

A lender may consider your application if:

• the hardship arrangement has ended
• you have resumed full repayments
• recent repayment history is clean
• your income is stable
• your expenses are manageable
• your debts are under control
• the reason for hardship is clearly explained
• the issue was temporary
• the new loan is affordable
• the lender’s policy allows the situation

The key question is whether the lender believes the financial difficulty is behind you.

What is a financial hardship arrangement?

A financial hardship arrangement is an agreement with a lender or credit provider to help you manage repayments during financial difficulty.

This may happen if you are affected by:

• job loss
• reduced income
• illness
• separation
• business cash-flow problems
• parental leave
• injury
• family emergency
• natural disaster
• unexpected expenses
• temporary inability to meet repayments

The arrangement may change your repayment obligations for a period.

It may involve reduced repayments, paused repayments, interest-only repayments, arrears capitalisation, loan term extension or another temporary solution.

Does financial hardship show on your credit report?

It can.

Comprehensive credit reporting may show financial hardship information for certain credit accounts.

This does not necessarily mean you defaulted. It may show that a financial hardship arrangement existed.

A lender reviewing your application may see:

• repayment history information
• financial hardship information
• whether payments were made on time
• whether payments were reduced under an arrangement
• whether accounts returned to normal repayment
• whether any arrears remain
• whether new missed payments occurred after hardship ended

This can affect how the lender views your application.

What is Financial Hardship Information?

Financial Hardship Information, often shortened to FHI, is credit reporting information that can indicate a hardship arrangement was in place.

It may show that your repayment history was affected by a formal arrangement rather than ordinary missed repayments.

A lender may look at:

• whether hardship information appears
• when it appeared
• which account it relates to
• whether the arrangement has ended
• whether full repayments resumed
• whether the account is now up to date
• whether other accounts were also affected
• whether there are defaults or arrears

The presence of hardship information does not always mean decline, but it usually needs to be explained.

What is Repayment History Information?

Repayment History Information, often shortened to RHI, shows whether repayments were made on time.

A lender may review repayment conduct across home loans, personal loans, credit cards and other credit accounts.

Repayment history may show whether an account was:

• current
• up to 29 days overdue
• 30 to 59 days overdue
• 60 to 89 days overdue
• 90 days or more overdue
• closed
• not reported
• subject to other reporting codes

The worse or more recent the repayment history issue, the harder the application may become.

Why lenders care about hardship arrangements

A hardship arrangement tells the lender that there was a period where normal repayments were difficult.

That does not mean the borrower is permanently high risk. Many people enter hardship because of a temporary event and recover fully.

The lender may still ask:

• what caused the hardship?
• when did it start?
• when did it end?
• were full repayments resumed?
• has the borrower made repayments on time since?
• are there any arrears remaining?
• did the hardship affect one account or several accounts?
• has income recovered?
• have expenses reduced?
• is the proposed new loan affordable?

The lender wants evidence that the hardship was temporary and resolved.

Can you refinance after a hardship arrangement?

Yes, refinancing after a hardship arrangement may be possible.

A refinance may be considered if the lender is comfortable with your current position and repayment history.

A lender may look at:

• current loan repayment history
• whether the hardship arrangement has ended
• how long you have made full repayments since hardship ended
• whether any arrears remain
• whether the refinance improves your position
• whether you are consolidating debt
• whether your income is stable
• whether the new repayment is affordable
• whether you are asking for cash out
• whether your credit report shows other issues

Refinancing is usually stronger where your current loan conduct has been clean for a period after hardship ended.

How long after hardship can you apply for a home loan?

There is no single waiting period across all lenders.

Some lenders may want to see a minimum period of full repayments after the hardship arrangement ends. Others may assess the full application and recent conduct more broadly.

Based on current policy research, lenders may focus on:

• whether hardship information appears in the last 12 months
• whether repayment history is clean over the last 24 months
• whether full repayments have been made after the hardship arrangement ended
• whether at least several months of normal repayments can be shown
• whether the application passes serviceability without relying on short-term fixes
• whether the borrower’s overall profile is strong

If the hardship arrangement ended recently, your lender options may be narrower.

What if you are still in hardship?

Getting a new home loan while you are still in financial hardship is difficult.

A lender may be concerned that you are already unable to meet existing obligations on normal terms.

If you are still in hardship, a lender may ask:

• why is the arrangement still active?
• when will normal repayments resume?
• are arrears increasing or reducing?
• is income expected to recover?
• is the hardship temporary or ongoing?
• would a new loan improve or worsen the position?
• is the borrower seeking help from their current lender?
• is the proposed loan responsible?

In most cases, it is better to stabilise the situation before applying for new borrowing.

What if the hardship arrangement has ended?

If the hardship arrangement has ended, the application may be stronger.

The lender may want to see that:

• the account is back to normal repayment terms
• full repayments have resumed
• repayments have been made on time
• no arrears remain
• no new hardship arrangement has started
• income has stabilised
• the original hardship cause has passed
• the borrower has rebuilt savings or cash flow

A clean post-hardship period is often one of the most important parts of the application.

What does “full payment after hardship” mean?

Full payment after hardship usually means you have returned to the normal contractual repayment required by the lender.

For example, if your home loan repayment was temporarily reduced, the lender may want to see that you are now making the full scheduled repayment again.

This matters because a borrower may technically be “up to date” under a hardship arrangement while still paying less than the normal repayment.

For a new lender, the stronger evidence is usually:

• hardship arrangement ended
• normal repayments resumed
• full repayments made for several months
• no late payments since
• no new hardship request
• account statements support the conduct

The lender wants to know that the borrower can manage ordinary repayments, not only hardship-adjusted repayments.

Can you get a home loan if hardship was caused by job loss?

Possibly.

Job loss is a common reason for hardship. A lender may consider the application if the job loss has been resolved and income is now stable.

The lender may ask:

• when did you lose the job?
• when did you start new employment?
• is the new role permanent, casual, contract or probationary?
• is income similar to before?
• have repayments been made on time since income resumed?
• is there a gap in employment history?
• is the new loan affordable on current income?

A borrower who has returned to stable employment and rebuilt repayment history may have more options than someone whose income is still uncertain.

Can you get a home loan if hardship was caused by illness or injury?

It may be possible if your income and repayment capacity have recovered.

A lender may look at:

• whether you have returned to work
• whether income is stable
• whether insurance payments were involved
• whether ongoing medical costs affect expenses
• whether repayments have returned to normal
• whether hardship has ended
• whether there are remaining arrears
• whether the proposed loan is affordable

You do not need to over-disclose private medical details to every party, but the lender may need a clear explanation of the financial impact and recovery.

Can you get a home loan after separation-related hardship?

Possibly.

Separation can create temporary financial stress, especially where there are two households, legal costs, child support, property settlement or a refinance to buy out an ex-partner.

A lender may review:

• whether the separation is finalised
• whether property settlement is complete
• whether child support is payable or receivable
• whether debts have been divided
• whether income is stable
• whether the existing mortgage conduct has recovered
• whether hardship arrangements have ended
• whether the refinance will improve the position

If the hardship was tied to a one-off separation event and the new position is stable, some lenders may consider the application.

Can you buy a house after hardship?

Yes, buying after hardship may be possible, but the application needs to be prepared carefully.

A lender may want to see:

• stable income
• clean recent repayment history
• deposit evidence
• genuine savings
• no current arrears
• no active hardship arrangement
• clear explanation
• manageable debts
• clean bank statements
• acceptable credit report

Buying may be harder than refinancing if you have a small deposit or need lenders mortgage insurance.

Can you refinance to consolidate debts after hardship?

It may be possible, but lenders assess this carefully.

Debt consolidation after hardship can be useful if it improves cash flow and clears expensive debts. But it can also increase the home loan and extend short-term debts over a longer period.

A lender may consider:

• what debts are being consolidated
• whether the refinance reduces repayments
• whether old facilities will be closed
• whether the borrower has changed spending behaviour
• whether repayment conduct is now clean
• whether hardship has ended
• whether the new loan is affordable
• whether enough equity is available

If the hardship issue was linked to overcommitment, the lender may want a stronger explanation and clean conduct evidence.

Related research: Can You Refinance Business Debt into a Home Loan?

Can you refinance out of a high-rate loan after hardship?

Yes, this may be possible in some cases.

A borrower may have moved to a higher-rate or specialist lender after credit issues, then want to refinance once their position improves.

A lender may review:

• current mortgage conduct
• time since hardship ended
• credit report
• income stability
• property value
• LVR
• current loan repayment history
• reason for refinance
• whether the new loan improves cash flow

Refinancing to a sharper loan may be easier after several months of clean full repayments.

Related research: Can You Refinance to Buy Out an Ex-Partner?

What if hardship appears on one account only?

Hardship on one account may be easier to explain than hardship across several accounts.

For example, you may have had a temporary arrangement on a home loan but kept all other commitments up to date.

A lender may ask:

• which account had hardship?
• why was only that account affected?
• did other accounts remain current?
• has the account returned to normal?
• were full repayments resumed?
• are there any arrears?
• is the issue likely to repeat?

Hardship across multiple accounts may suggest broader cash-flow stress and can be harder to overcome.

What if hardship appears on a closed account?

A closed account with past hardship may still be reviewed if it appears in your credit report or statements.

The lender may ask:

• when was the account closed?
• was it paid out in full?
• was there any loss to the lender?
• were arrears cleared?
• did the account close after refinance, sale or payout?
• has conduct been clean since?

A closed hardship-affected account is usually stronger if it was fully repaid and recent conduct on other accounts is clean.

What if the hardship arrangement was with your current lender?

If you are applying with the same lender, they may have more internal visibility over the arrangement.

They may know:

• when hardship started
• what arrangement was approved
• whether you complied with the arrangement
• whether full repayments resumed
• whether arrears remain
• whether the account is now performing normally

This can help or hurt, depending on the conduct.

If you are applying with a new lender, they may rely more heavily on credit reporting information, account statements and your explanation.

What documents do lenders need after financial hardship?

The exact documents depend on the lender and the application.

You may need:

• credit report
• current loan statements
• repayment history statements
• hardship arrangement letter
• hardship exit letter
• evidence the arrangement has ended
• evidence full repayments have resumed
• bank statements
• payslips
• tax returns, if self-employed
• savings statements
• debt payout statements
• explanation letter
• evidence of changed circumstances

If you are refinancing, the lender may ask for recent statements on the loan being refinanced.

What should a hardship explanation letter include?

A clear explanation letter can help the lender understand what happened.

It should be factual and concise.

A useful hardship explanation may include:

• what caused the hardship
• when it started
• which accounts were affected
• what arrangement was made
• when the arrangement ended
• whether full repayments resumed
• whether arrears were cleared
• what has changed since
• why the issue is unlikely to happen again
• how the new loan remains affordable

The explanation should match the credit report, account statements and supporting documents.

How lenders review refinance statements

For refinances, lenders may review statements to confirm repayment conduct.

They may check:

• repayment dates
• repayment amounts
• missed repayments
• late payments
• dishonours
• arrears
• over-limit events
• hardship arrangements
• whether payments were caught up quickly
• whether the account is now current

Some lenders may rely on credit reporting data where available. Others may manually request statements if the credit report does not show enough repayment detail or if further investigation is needed.

What if you missed payments after hardship ended?

Missed payments after hardship ended can make the application harder.

The lender may see this as a sign that the borrower has not fully recovered.

A lender may be more cautious if:

• full repayments resumed and then were missed
• multiple accounts show arrears
• the missed payments are recent
• the borrower entered another hardship arrangement
• the account remains behind
• there are dishonoured payments in bank statements

If there are missed payments after hardship, waiting and rebuilding clean conduct may improve options.

Can financial hardship affect your interest rate?

It can.

Some borrowers may still qualify with mainstream lenders after hardship if enough time has passed and conduct is clean.

Others may need a specialist or non-bank lender, especially if the hardship is recent, unresolved or linked to other credit issues.

Specialist lending may involve:

• higher interest rates
• higher fees
• lower maximum LVR
• stricter cash-out rules
• more documentation
• shorter review period before refinancing later

The goal may be to stabilise the position now and refinance later once the credit profile is stronger.

Can you get approved with hardship and a small deposit?

This can be difficult.

A small deposit means higher LVR, and higher LVR usually means more risk for the lender.

If lenders mortgage insurance applies, the mortgage insurer may also review the credit history.

A hardship-affected application may be stronger with:

• larger deposit
• lower LVR
• clean post-hardship repayments
• stable income
• low debts
• clear explanation
• no defaults
• no current arrears
• strong savings history

High-LVR lending soon after hardship can be challenging.

Can you get approved if you have hardship plus defaults?

This is harder than hardship alone.

A hardship arrangement may be manageable if the account returned to normal. Defaults suggest a more serious credit issue.

A lender may consider:

• whether defaults are paid
• default amounts
• default dates
• type of creditor
• whether the hardship caused the defaults
• whether recent conduct is clean
• deposit size
• income stability
• whether specialist lending is required

If you have both hardship and defaults, the application needs careful lender selection.

Can you get approved if hardship was caused by business cash flow?

Possibly, but self-employed borrowers may need stronger evidence.

The lender may review:

• current business income
• business bank statements
• tax returns
• financial statements
• BAS
• ATO debt
• business debts
• whether trading has recovered
• whether the hardship issue is resolved
• whether personal debts are now paid on time

If business cash-flow problems are ongoing, approval may be harder.

Does hardship affect pre-approval?

Yes, it can.

A pre-approval may not be fully assessed, depending on the lender. If financial hardship information is discovered later, the lender may reassess the application.

This can affect:

• borrowing power
• lender appetite
• approval conditions
• deposit requirements
• LVR
• property choice
• settlement timing
• final approval

If you have had a hardship arrangement, disclose it before relying on pre-approval.

What if you are applying jointly with someone else?

If you apply with another borrower, the lender may review both credit histories.

A hardship arrangement for one applicant can still affect the whole application.

The lender may consider:

• which applicant had hardship
• whether that applicant’s income is needed
• whether the hardship was resolved
• whether the other applicant has clean credit
• whether debts are shared
• whether the household position is now stable
• whether the loan passes servicing

A strong co-borrower may help, but they do not erase the hardship history.

Can a guarantor help after financial hardship?

A guarantor may help with deposit or security, but it does not remove the hardship concern.

The lender still needs to assess the borrower’s credit conduct and ability to repay.

A guarantor may help if:

• the main issue is limited deposit
• the borrower has stable income
• post-hardship conduct is clean
• the guarantor property is acceptable
• the lender allows guarantor support

A guarantor may not help if the borrower is still in hardship, has recent missed repayments or cannot afford the loan.

Can hardship be removed from your credit report?

Financial hardship information is generally part of credit reporting where it has been correctly reported.

If you believe the information is wrong, you may need to dispute it with the credit provider or credit reporting body.

You may need evidence such as:

• repayment records
• lender correspondence
• hardship arrangement documents
• account statements
• correction notice
• dispute outcome letter

If the hardship information is accurate, the better strategy may be to show clean conduct after the arrangement.

10 common mistakes after financial hardship

1. Do not assume hardship information is the same as a default.
2. Do not assume hardship will be ignored because payments were reduced by agreement.
3. Do not apply before checking your credit report.
4. Do not hide the hardship arrangement from your broker or lender.
5. Do not assume all lenders treat hardship the same way.
6. Do not apply while the arrangement is still active unless advice has been obtained.
7. Do not miss payments after hardship ends.
8. Do not rely on pre-approval without disclosing hardship.
9. Do not assume a guarantor fixes hardship conduct.
10. Do not assume a bank decline means no lender will consider you.

How to improve your chances before applying

Before applying after financial hardship, it helps to prepare your evidence carefully.

Useful steps include:

• get a copy of your credit report
• identify which accounts show hardship information
• confirm the hardship arrangement has ended
• collect evidence of full repayments after hardship
• keep loan statements showing clean conduct
• clear any arrears where possible
• avoid new missed repayments
• reduce unnecessary debts where practical
• keep bank statements clean
• build savings history
• prepare a clear explanation letter
• compare lender policy before submitting the application

The goal is to show that the hardship was temporary and your current position is stable.

Should you wait before applying?

Sometimes waiting can help.

Waiting may improve your options if:

• the hardship arrangement ended recently
• full repayments have only just resumed
• your credit report shows recent repayment issues
• arrears are still being cleared
• bank statements need to improve
• income has only recently recovered
• you are close to saving a larger deposit
• you need lenders mortgage insurance

But waiting is not always necessary.

You may be ready to apply if:

• the hardship arrangement has ended
• full repayments have been made for several months
• repayment history is clean
• income is stable
• debts are manageable
• deposit or equity is suitable
• the explanation is clear
• the right lender accepts the situation

A broker can compare whether applying now or waiting would give you better options.

Example scenarios

Scenario 1: Hardship ended six months ago

You had a temporary hardship arrangement after losing work.

You have since started a new permanent job and made full repayments for six months.

Some lenders may consider the application if the rest of your profile is strong.

Scenario 2: Hardship still active

You are still on reduced repayments with your current lender.

This may be difficult because the lender may not be satisfied that you can manage normal repayments yet.

Scenario 3: Refinance after hardship

You want to refinance to a lower rate after completing a hardship arrangement.

The lender may review whether the new loan improves your position and whether you have made full repayments since hardship ended.

Scenario 4: Hardship plus new missed payment

Your hardship arrangement ended, but you missed another repayment two months later.

This can make approval harder because the lender may see ongoing repayment stress.

So, can you get a home loan after a financial hardship arrangement?

Yes, you may be able to get a home loan after a financial hardship arrangement.

The strongest applications usually have:

• hardship arrangement ended
• full repayments resumed
• clean post-hardship repayment history
• stable income
• no current arrears
• manageable debts
• clear explanation
• suitable deposit or equity
• clean bank statements
• lender policy that accepts the position

Financial hardship can make a loan application more complex, but it does not always mean approval is impossible.

Need help applying after financial hardship?

A mortgage broker can help compare lenders that may consider borrowers after financial hardship, repayment arrangements, missed repayments, specialist lending or refinance after credit issues.

We can review your credit report, hardship history, loan statements, income, deposit and borrowing position before you apply.

If you have had a hardship arrangement and want to buy or refinance, speak with a mortgage broker who understands how different lenders assess credit conduct and hardship information.