Managing Your Mortgage During Job Loss

Losing your job feels like the ground disappearing beneath your feet. When you have a mortgage to pay, that feeling intensifies. The house that represents security and stability suddenly feels like a burden you cannot carry. But before panic sets in, take a breath. New Zealand has protections in place for borrowers facing genuine hardship, and your lender has more interest in helping you stay in your home than you might expect.

The worst thing you can do is nothing. Missing payments without communicating with your bank damages your credit, accumulates penalties, and limits your options. The best thing you can do is act quickly, honestly, and strategically.

Contact Your Lender Immediately

This advice cannot be emphasised enough. The moment you know your income is at risk, whether through redundancy, health issues, or business closure, contact your bank. Do not wait until you have missed a payment. Do not hope things will sort themselves out. Pick up the phone.

Banks have dedicated hardship teams whose entire job is helping customers through difficult periods. Under the Credit Contracts and Consumer Finance Act, lenders are required to treat borrowers fairly when they are experiencing financial difficulty. This is not just policy; it is law.

Understanding Mortgage Holidays

A mortgage holiday, or payment deferral, allows you to pause or reduce your mortgage payments for a defined period, typically three to six months. During this time, you get breathing room to find new employment or sort out your finances.

The important thing to understand is that interest does not stop accruing during a mortgage holiday. Your loan balance continues to grow, and those deferred payments will need to be repaid eventually, usually by extending your loan term or increasing future payments. This is not free money; it is borrowed time. But borrowed time can be exactly what you need.

Other Options Your Bank May Offer

Mortgage holidays are the most commonly discussed option, but they are not the only assistance available. Depending on your circumstances, your lender might offer other arrangements.

Reduced payments: Instead of pausing completely, you might switch to interest-only payments for a period. This costs less in the long run than a full payment holiday while still reducing your immediate burden.

Extended loan term: Stretching your mortgage over more years reduces each payment, though it increases the total interest you pay over the life of the loan.

Restructuring your loan: If you have multiple loan portions at different rates, your bank might consolidate or restructure them to achieve a lower overall payment.

Accessing redraw or revolving credit: If you have made extra payments on your mortgage, you may be able to redraw those funds to cover living expenses while you search for work.

Government Assistance Available

Do not overlook government support. If you have lost your job, you are likely entitled to Jobseeker Support through Work and Income. The amount depends on your circumstances, but it provides essential income while you search for new employment.

The Accommodation Supplement can help with housing costs, including mortgage payments for homeowners in some circumstances. Eligibility depends on your income, assets, and accommodation costs. It is worth applying even if you are not sure you qualify.

Free Help Is Available

You do not have to navigate this alone. New Zealand has free budgeting services staffed by trained financial mentors who can help you assess your situation, create a survival budget, and even advocate on your behalf with creditors.

MoneyTalks: Free financial helpline staffed by trained financial mentors. They can help you work through your options and connect you with local services. Call 0800 345 123 or text 4029.

Citizens Advice Bureau: Free information and advice on a wide range of issues, including financial difficulties and your rights as a borrower.

Community Law Centres: Free legal advice if your situation becomes complex or if you feel your lender is not treating you fairly.

What About Selling Your Home?

Nobody wants to think about this, but it is worth addressing directly. Selling your home is a last resort, not a first option. Explore every alternative first. However, if your financial situation genuinely cannot recover, and you are at risk of accumulating unmanageable debt or facing mortgagee sale, a voluntary sale on your own terms is far better than the alternative.

A voluntary sale lets you control the process, choose your timing, and maximise the price achieved. A mortgagee sale, where the bank sells your property to recover their debt, typically achieves lower prices and destroys your credit rating. If selling becomes necessary, doing it yourself preserves more equity and more options for your future.

Looking After Yourself

Finally, remember that financial stress takes a genuine toll on mental health. Job loss combined with mortgage pressure is one of the most stressful combinations anyone can face. Look after yourself. Talk to friends and family. Access counselling services if you need them. The 1737 helpline provides free support for anyone feeling stressed or anxious.

Your home matters, but so do you. Financial problems are almost always temporary, even when they do not feel that way. With the right support and a clear plan, most people get through these difficult periods and come out the other side.