Selling your home - Mortgage stress

Mortgage stress logoThinking about selling your home is a hard thing to do. You may need to consider selling your home if you cannot afford your current loan repayments and will be unable to afford them for years to come. 

If you decide to sell, you need to give yourself as much time as possible to sell your home and get a good price for it. Try to make this decision as early as possible (and preferably before the lender starts legal proceedings) because:

  • it is better to sell your home yourself, rather than the lender making all the decisions about the sale,
  • you are more likely to get a better price for your home and avoid legal costs if you sell your home without the lender being involved

The decision whether to sell your home is most difficult when you are hoping that you can make the loan repayments soon, but you don’t know when this will happen. The problem is that as time goes on, things are going to get worse and you will get further behind on your loan repayments and add lots of extra interest. 

In these circumstances, you could:

  1. Try to make a new repayment arrangement with the lender for a realistic amount of time (for example, 6 months or whatever time   your lender agrees to).
  2. Make the repayments, or whatever you can pay, for the agreed period of time.
  3. If you still cannot make the full loan repayments at the end of the period, then consider putting your home on the market.
  4. If you decide to sell, go back to the lender and try to negotiate another repayment arrangement on the basis that you are selling your home.

It is never too late to ask for time to sell, but the lender is less likely to agree during or later in the enforcement process. If legal proceedings have already started, enforcement costs will be added to the amount you owe to the lender.

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

If your home sells for less than the amount you owe the lender, you will still owe the lender the shortfall. If you think your home may be worth less than the amount you owe on your home loan, get legal advice.

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

Step 1 - Place your home on the market

You need to:

  • place your home on the market, and
  • price it realistically so that it will sell but for the best price possible.

If you are using a real estate agent, explain top them how long you have to sell the house. This will usually be within 6 months but could be less than 3 months depending on what arrangements can make with your lender. 

Step 2 - Tell your lender

Your lender will need evidence that you are selling your home. You will usually need to give them:

  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 hardship variation with your lender

Ask to change the repayment arrangement on the basis that:

  1.  You are in financial hardship.
  2.  You will make regular repayments of what you can afford until the home is sold.
  3.  You need a reasonable time to sell your home (ask for 6 months, but you may need to consider agreeing to only 3 - 4 months).
  4.  Your loan will be repaid when the home is sold.
Step 4 - Tell the lender if you accept an offer

If you accept an offer from someone to buy the house, you need to notify the lender as soon as possible and provide evidence of the contract of sale. You will need to arrange for the mortgage to be discharged to be able to transfer ownership of the house to the buyer at settlement.

Changing your mind

If you find a job, get well, or receive a large lump sum of money before your home sells, you still have the option of trying to:

  • negotiate another arrangement on the basis you can now make repayments, and/or
  • repay the loan (although this will be more difficult if the lender has already obtained a court judgment).


The information displayed on this page is provided for information purposes only and does not constitute legal advice. If you have a legal problem, you should see a lawyer. Legal Aid Western Australia aims to provide information that is accurate, however does not accept responsibility for any errors or omissions in the information provided on this page or incorporated into it by reference.