How to stop a mortgagee sale: the options and the timeline

What is a mortgagee sale?

A mortgagee sale is a sale of a property by the lender (the mortgagee) to recover money owed under a mortgage. It happens when a borrower is in default and the lender uses the power of sale built into the mortgage and the relevant state or territory property law. Sales are usually conducted by an agent, often through auction, with the proceeds applied to costs, then the lender’s debt, then any other registered interests and finally the owner if anything is left.

It is the end of a process, not the start. Before a lender can sell, there are normally missed repayments, a default notice, a period to fix the problem and, in many cases, court steps or a demand. Each stage is a point at which something can be done. This guide walks through those stages, what stops or slows them, and where private finance fits. It is general information, and anyone facing a notice should also get independent legal advice and free financial counselling.

Ownright Custom Finance, led by Trevor Scott, arranges refinance and private finance Australia-wide, including for borrowers who have received enforcement notices. A broker cannot give legal advice, but can often find a way to clear a lender out of the picture if there is enough equity and a believable plan.

What are the stages before a mortgagee sale?

The exact sequence depends on the loan type, the lender and the state, but the broad path looks like this.

1. Missed repayments and arrears. The loan falls behind.
2. Contact from the lender. Calls, letters and offers to discuss hardship.
3. Default notice. MoneySmart explains that a lender may send one once a repayment is overdue, though it may wait until the arrears reach 90 days or more. The notice gives 30 days to pay the missed amounts plus the next regular repayment, and hardship relief can still be requested at this stage.
4. Legal action. If the arrears are not resolved, the lender can issue a statement of claim or summons to recover the whole loan. The time to respond varies by state or territory.
5. Court order and possession. MoneySmart notes that if the lender obtains a court order, a sheriff or bailiff can evict. The borrower may still owe any remaining balance.
6. Sale. The lender, or a receiver, markets and sells the property.

Some lenders sell under the power of sale in the mortgage without a full court process, after the statutory notice has expired, so the order of events can differ.

How long are the notice periods by state?

Notice rules sit in state and territory property legislation as well as in consumer credit protections, and details change over time, so the notice itself and a lawyer’s advice are the final word. As general guides:

Jurisdiction	General position on notice before a lender can sell (to be confirmed against current law)
Victoria	A notice under the Transfer of Land Act 1958 is commonly served after a month’s breach, and regulated loans also need a default notice with at least 30 days to fix
New South Wales	A notice under section 57 of the Conveyancing Act gives around 30 days to fix arrears, usually alongside a credit code default notice for home loans
Queensland	Under the Property Law Act 2023, the lender must give notice requiring the default to be remedied within 30 days, and cannot contract out of that
Other states and territories	Similar notice concepts apply, with local variations in timing, form and court involvement

These are summaries of commonly published guidance, not legal advice. Anyone holding a notice should read it carefully, note the dates and take advice from a solicitor or community legal centre that works in that state.

In Queensland, secondary commentary on the Property Law Act also notes duties on the lender when it sells: reasonable care to sell at market value and, for certain consumer mortgages, adequate advertising, reliable evidence of value, maintaining the property and generally selling by auction unless another method is more appropriate. Most states have a version of the principle that a lender must act in good faith and take reasonable care to obtain a proper price.

What are the main ways to stop a mortgagee sale?

There is no single switch. The realistic options are:

Option	What it involves	When it fits
Clear the arrears	Pay the overdue amount and costs within the notice period	A temporary problem with funds available
Hardship arrangement	Ask the lender to vary repayments because of hardship	Income will recover, and the lender is willing
Refinance to a bank	A new lender pays out the old loan	The borrower still qualifies, and time allows
Private finance	A private lender pays out the loan on the strength of equity and an exit	Banks decline, equity exists, time is short
Sell the property yourself	The owner sells on the open market	Equity is there but the loan cannot be sustained
Legal challenge or injunction	A court order on proper grounds	The lender has not followed required process

Often it is a combination. A hardship request buys time, a private loan clears the arrears, and a later refinance replaces the private loan.

How does a hardship request work?

MoneySmart explains the practical steps. The borrower contacts the lender’s hardship officer with the loan details, says that repayments need to change because of hardship, explains why they are struggling, how long it is expected to last and how much they can afford to repay. The lender must write back with the outcome within 21 days. If it asks for more information, the borrower has to supply it, and the lender then has 21 days from receipt. If it refuses, it must give a reason.

If the request is refused, the borrower can ask the lender’s internal dispute resolution team to review it and, if there is still no agreement, can complain to AFCA, which offers free, independent dispute resolution. Consumer advocates have also noted that a complaint to the relevant ombudsman scheme can pause enforcement while the dispute is handled, though that depends on the case and should be confirmed with a financial counsellor or legal service.

A hardship request is not a guaranteed fix. It works best when income will recover or a defined event, like a sale, will clear the debt, and when the request is made early.

How can refinancing stop a mortgagee sale?

If a new lender pays out the existing mortgage, there is nothing left for the old lender to enforce. A bank refinance is the cleanest outcome, but banks tend to be cautious with files that have arrears, defaults on the credit file or enforcement notices. Where a bank is possible, the broker will say so.

Where it is not, a non-bank lender may help, and several specialist lenders look at arrears refinances. These lenders focus on the property, the equity and the plan rather than the recent history alone. Our page on mortgage arrears help and the page on urgent mortgage refinance go into this in detail.

How can private finance stop a mortgagee sale?

Private finance is often the practical answer when time is short. A private lender can pay out the existing mortgage, including arrears and enforcement costs, and take a new first mortgage, giving the borrower breathing room. It works when:

• There is meaningful equity in the property.
• The payout figure can be obtained from the existing lender quickly.
• There is a plausible exit, such as a later bank refinance after the credit file stabilises, or a controlled sale.
• The borrower is open about the full position, including notices, other debts and any court steps.

The lender will want to see the notices received, a current payout figure, the property details and the exit strategy. It will also need a valuation, and valuation timing is usually what sets the pace. Because the facility is short-term, the exit plan matters more than ever. Our guide on bridging loan exit strategies shows how to build one that works.

Pricing is set on the individual situation and the speed involved. It is rarely the cheapest funding, and that is the honest trade-off: it costs more than conventional lending, but it can prevent the loss of the property and the much larger costs of a forced sale.

Is selling the property yourself a better option?

For many owners it is. MoneySmart notes that selling yourself usually achieves a better price than a lender’s sale and avoids the lender’s legal costs. A forced sale can mean a quick campaign, limited preparation and a buyer pool that knows the seller is under pressure.

A voluntary sale also keeps the owner in control of timing, agent choice and presentation. The lender usually wants evidence that a sale is genuine, such as an agent’s authority and, ideally, a signed contract. MoneySmart advises telling the lender if selling is the plan, since they may ask for proof such as the sale contract. Lenders are often willing to hold off enforcement when they can see a real sale progressing.

Private finance and a voluntary sale also work together. A short-term loan can clear the arrears and stop enforcement while the property is prepared and sold in a sensible timeframe. The sale proceeds then repay the loan.

What if the arrears include a tax debt or other creditors?

Mortgage arrears often sit next to other problems: a tax debt, trade creditors or a failing business. These need to be on the table, because a lender providing new money will assess the entire position.

The ATO’s guidance on payment plans notes that an online plan may be possible for debts of $200,000 or less, while owing more, needing a term longer than two years, or having faced firmer recovery action in the previous six months means contacting the ATO directly. Having an active arrangement can make a refinance file easier to present. Our guide on ATO debt and your property covers the options in detail.

What documents help in an urgent situation?

• All notices received from the lender, with dates, including default notices, statements of claim and any sale advice.
• A recent loan statement and a current payout figure.
• Title details and rates notice.
• Identification for all owners.
• A short timeline of how the arrears arose and what has changed.
• Evidence of the exit, such as a contract of sale, a conditional approval or an accountant’s letter.
• Details of any ATO or other creditor arrangements.

Having these ready can save days, and in an enforcement timeline days are valuable.

What does an illustrative scenario look like?

This is illustrative only and uses no real names. A self-employed owner fell behind on an investment property loan after a bad trading year. A default notice arrived, then a statement of claim. The business has recovered, and the accountant has now finalised the missing tax returns, but a bank will not look at the file with arrears and a claim on record. There is substantial equity in the property.

A broker obtains the payout figure, confirms the valuation approach and arranges a short-term private first mortgage that pays out the existing lender. The private loan term is set with a buffer, and the exit is a bank refinance once the lodged returns and several months of clean repayments are on the record. Alternatively, if the owner prefers, the property can be sold in an orderly campaign. Either way, the forced sale is avoided.

What mistakes make a mortgagee sale more likely?

• Ignoring notices. MoneySmart specifically advises not to ignore a default notice.
• Waiting until a sale date is set. Options narrow quickly once advertising begins.
• Not telling the lender about a genuine plan. Silence reads as inaction.
• Hiding other debts. A new lender will find them, and late surprises damage trust.
• Relying on a single exit. A backup improves both approval and outcomes.
• Skipping legal and counselling support. The National Debt Helpline on 1800 007 007 and community legal centres can provide free help.

How does Ownright help?

Ownright looks at the notices, the equity and the timeline first, then works out whether a bank, a private lender or a sale is the best route. The team knows funding sources that many brokers never use, and will tell you plainly if the numbers do not support a refinance. Nothing is promised in advance, speed depends on the lender, the security and how quickly documents arrive, and pricing is set on your situation.

If you hold a default notice or a sale date, call 03 7043 7233 now or send your details with the key dates in the first line. For more on how this fits with other options, see our page on stopping a mortgagee sale.