If you are struggling to make mortgage repayments in New Zealand, you have legally protected rights under the Credit Contracts and Consumer Finance Act (CCCFA). Banks must genuinely consider a hardship application — not simply decline it. Understanding your rights before you contact your bank puts you in a significantly stronger position.
Under the CCCFA, NZ borrowers have the legal right to apply for hardship relief if their circumstances have genuinely changed — illness, job loss, injury, or relationship breakdown are common qualifying events. The bank must genuinely consider your application and may agree to reduced repayments, a repayment pause, or a loan term extension. Contact your bank before missing payments whenever possible.
What Is the CCCFA Hardship Provision?
The Credit Contracts and Consumer Finance Act (CCCFA) contains specific provisions protecting borrowers who experience genuine financial hardship. Sections 55–58 of the Act give residential mortgage borrowers the right to:
- Apply for hardship relief when circumstances have genuinely changed
- Require the lender to genuinely consider the application — not just decline summarily
- Propose modified repayment terms and have them considered
- Challenge an unreasonable refusal through the dispute resolution process
This is a legal right, not a discretionary favour. However, it has conditions — the change in circumstances must be genuine, and the proposed modified terms must be reasonable and likely to result in eventual full repayment.
What Qualifies as Genuine Hardship?
The CCCFA requires a “genuine change in circumstances” — something that occurred after the loan was taken out that you could not reasonably have anticipated. Common qualifying events include:
- Illness or injury (yourself, a partner, or a dependent you’re now caring for)
- Involuntary redundancy or job loss
- Loss of business income (self-employed borrowers)
- Natural disaster or emergency
- Relationship breakdown creating a significant income reduction
- Unexpected major expense (not day-to-day budget pressure)
The hardship provision is not intended for borrowers who simply overstretched their budget at application. Banks assess whether the change in circumstances is genuine and post-origination.
How to Apply for Mortgage Hardship Relief
Step 1: Contact the bank’s hardship team All major NZ banks have a dedicated financial hardship or customer care team. Do not call the standard customer service line — ask specifically to speak with the hardship or financial difficulty team.
Step 2: Apply in writing Put your application in writing — email is acceptable. A written record protects you if there is later dispute about what was agreed. Include:
- A clear explanation of what changed and when
- Your current income, expenses, and financial position
- What modified terms you are requesting (e.g., reduced repayments for 6 months, interest-only for 3 months, pause of 3 months)
- Your plan for returning to normal repayments
Step 3: Provide supporting documentation Medical certificates, redundancy letters, IRD income summaries, or other relevant evidence supporting the change in circumstances.
Step 4: The bank responds The bank must respond within a reasonable time — typically 20 working days. Their response must genuinely engage with your application, not simply decline it. They may request further information.
What Banks Can Offer Under Hardship
There is no fixed formula — banks have discretion in what they offer, but common modifications include:
| Option | How it works |
|---|---|
| Repayment reduction | Lower repayment amount for an agreed period |
| Repayment pause (mortgage holiday) | No payments for up to 3–6 months; interest capitalises |
| Interest-only period | Pay interest only; balance does not increase |
| Loan term extension | Extend the mortgage term to reduce repayments permanently |
| Capitalisation of arrears | Roll any missed payments into the loan balance |
The bank may also combine these — e.g., interest-only for 3 months followed by a loan term extension.
Credit File Implications of Hardship Arrangements
One of the most common concerns is whether a hardship arrangement affects your credit file. The position in NZ:
- Applying for hardship does not by itself create a negative credit event
- Ask the bank explicitly not to register any default or adverse information during an agreed hardship arrangement
- Major NZ banks have consumer commitments not to record adverse information while a customer is meeting agreed hardship arrangement terms
- If the bank registers a default without justification during an arrangement, this can be challenged through the dispute process
Get any agreement about credit file treatment in writing.
If the Bank Refuses or the Response Is Inadequate
If your bank declines your hardship application or fails to genuinely consider it, you have escalation options:
1. Internal complaints process Escalate to the bank’s complaints team (separate from the hardship team). Each major NZ bank must have a formal complaints process.
2. Financial Services Complaints Limited (FSCL) FSCL is a free dispute resolution service for financial complaints, including mortgage hardship decisions. fscl.org.nz
3. Banking Ombudsman The Banking Ombudsman investigates complaints about NZ banks’ conduct. bankomb.org.nz
These services are free to consumers. They can recommend outcomes including reinstating a hardship arrangement that was improperly declined.
Free Help with Mortgage Hardship in NZ
You do not have to navigate this alone. Free services include:
- MoneyTalks — 0800 345 123: Free budgeting and financial mentoring service, available 8am–8pm weekdays and 10am–2pm Saturdays
- Citizens Advice Bureau (CAB): Free legal and financial guidance. cab.org.nz
- FinCap: Operates a nationwide network of free financial mentors. fincap.org.nz
- Community Law Centres: Free legal advice, including on creditor disputes. communitylaw.org.nz
Frequently Asked Questions
What is my legal right to mortgage hardship relief in NZ?
Under sections 55–58 of the CCCFA, any residential mortgage borrower who experiences a genuine change in circumstances has the right to apply for hardship relief. The lender must genuinely consider the application and cannot simply decline without engagement.
What change in circumstances qualifies for NZ mortgage hardship?
Genuine post-origination changes such as illness, injury, redundancy, job loss, loss of business income, or relationship breakdown. The CCCFA is not designed for borrowers who were always in financial difficulty — the change must be genuine and unforeseeable at the time of borrowing.
Will a hardship application affect my credit score in NZ?
Not automatically. Ask the bank to confirm in writing that they will not record adverse credit information during an agreed hardship arrangement. Major banks have consumer commitments not to register defaults during active, agreed hardship arrangements.
Can the bank force me to sell my house during a hardship arrangement?
No — not while you are meeting the terms of an agreed hardship arrangement. A bank can only pursue mortgagee sale after a formal default has occurred and the demand and grace period processes have been completed.
Where do I complain if a NZ bank refuses my hardship application?
Escalate first through the bank’s internal complaints process. If unsatisfied, use Financial Services Complaints Limited (FSCL) at fscl.org.nz or the Banking Ombudsman at bankomb.org.nz. Both services are free.