Bad Credit Loans, Bad Credit Home Loans – Bad Credit Finance Australia

Credit Card debt is one of the most frequent reasons why Australians get into Debt Problems. Very few people have the discipline that credit card use requires. If you do not possess the necessary Credit Card discipline – simply give them up and never use them again.

As of December 2010,  Aussies have racked up almost $50 billion in credit card debt. Many families are now experiencing the Christmas spending hangover….and it can be quite unpleasant.

Out of control credit cards often lead to defaults and bad credit. If all you repay is the minimum set amount, before you know it your debts will spiral to balances you will not be able to pay out. Next comes the payment of interest on interest and so on.

New research from Citibank Australia shows as a nation we are getting better at repaying our credit cards in full. Many Australian understand that one should not put any purchase on a credit card which one can not afford to fully repay by the end of the month. Credit Cards should be used in such a way that they offer the convenience of paying when you do not have cash handy, but they should not incur any interest. Ideally credit card balances should be repaid during the interest free period.

Statistics suggest that 59 per cent of people said they paid off their credit card in full each month, whereas three years ago it was only 40 per cent.

Last year 9 per cent of people said they paid the bare minimum each month, whereas three years ago 17 per cent of card users paid the minimum.

Citibank research also confirmed that women have more problems with managing credit card debt than men.

Whereas only 4 per cent of high-income households pay the minimum each month, 16 per cent of low-income households those earning less than a combined $50,000 a year do likewise.

If you can qualify for a low rate personal loan then it may make sense to consolidate credit cards and store cards into a personal loan. However the best and cheapest form of debt consolidation is into your mortgage. Adding unsecured debt to your mortgage allows you to significantly reduce your monthly repayments by having your unsecured debts incur secured level of interest – which is significantly cheaper than the rate on your credit cards.

Adding a credit card balance of $10,000 to your mortgage can make it cost you $20,000 plus in the long run, however by keeping the credit card where it is you can potentially pay a lot more than that to your credit card company.

A growing number of people, however, are switching to cards that offer interest-free honeymoon periods for debts transferred over from rival credit cards. These cards also offer a good debt consolidation alternative if used correctly.

It is important that you make every effort to:

- Payout the full balance transfer amount before the end of the transfer period.

- Don’t make extra purchases on the card thinking you will only pay the balance transfer interest rate, as this is not the case.

- Remember, in most cases repayments go towards the balance transfer first before being applied to any additional purchases.

- At the end of the balance transfer period, consider closing the card and moving your other debt to a low interest card.

- Do not hold too many cards if you can help it as many credit cards incur an annual fee. The more cards you have, the more you pay.

- You don’t have to have your credit card with the same provider you have your everyday account with. Shop around.

Arrears on mortgages underlying Australian prime residential mortgage-backed securities dropped to their 1.35% in November 2001 – reaching their lowest level during that year.

Even arrears on low doc mortgages, loans which are normally perceived to be very risky, also came in lower than in past months.

Subprime arrears fell by 72 basis points to 11.93 per cent in November 2010, compared with the level in October – taking the total subprime outstanding balances in November to below $2.2 billion.

But while arrears reached a new low in 2010, Standard & poor’s credit analyst Vera Chaplin said she expects to see home loan defaults increase during 2011 due to higher interest rates and the impact from Christmas spending.

Those of us who have a home loan are working like mad at reducing the amount owed. Others who are not yet home owners are running around trying to find someone who will lend them the ‘fortune’ that it now takes to purchase your own home in Australia.

Once you do qualify for the status of ‘home owner’ , with the prestige come the thousands of dollars a month obligations to your home loan lender. If you have any history of bad credit, your home loan rate can be easily in the double digits, making getting ahead in your mortgage seem like an impossibility.

Being a home owner certainly over time does offer you the kind of financial freedom that few investments can match.

Reducing your home loan quickly does more than just save you tens of thousands of dollars in interest costs over the life of your loan, it offers you a peace of mind and a buffer of funds that you could draw upon in the event of a rainy day.

While most home owners understand the importance of giving your home loan a good ’spring clean’ once in a while, many would rather clean the oven or mow the lawn than review their financial situation.

But whether or not you do review your home loan, there are plenty of ways to speed up its disappearing act.

Start out with small savings.

Small savings every day add up to huge benefits. For example, a couple who stop spending $10 each a day on lunches at work will save $5000 a year – which equates to $133,000 in interest and nine years off the life of a 25-year, $250,000 loan. Write a list of everything you spend each week and look for small savings to make.

Automate your monthly repayments and increase their frequency if possible.

Ask your bank or credit union to deduct extra repayments every month, and you won’t notice the money. Many people maintained their old repayment levels when interest rates fell sharply in 2008, but now that they’re heading back to their 2007 levels it could be time to increase your automatic payments.

Take the time to look for a better mortgage deal.

Shop around for a better deal with other lenders. Then confront your bank and ask them to match it. You have nothing to lose by using this Jedi mind trick they only need to think that you’re considering a switch.

Property owners have been doing it tough for some time now. Cost of living is on the rise as were home loan rates through most of 2010.

While there is little that any of us can do about the rising interest rates and the cost of living, and the increasing home loan rates, we are able to take some steps to ensure that we pay as little as we can and lessen your family’s financial burden during 2011.

The ‘Great Australian Dream’ is well know to most but the reality of repaying a hefty mortgage can be challenging especially in the current economic environment.

“According to Mortgage Choice’s 2010 Consumer Sentiment Survey the biggest concern for 2011 was living costs such as utilities and clothing, followed by interest rates, then economic management at the Federal Government level, job security and food costs.

Now at the start of a new year is a great time to review your family budget and consider ways that you are able to save more.

Here are some worthwhile home loan saving tips to take with you into the new year:

Step 1: Are you getting the best deal on your home loan?
Financial circumstances and lifestyles change, as do your needs. It may be that you and your family are in a different position today to when you first took out your mortgage.  Consider how competitive your current home loan is, what features you are paying for and aren’t using or don’t have and need, the fees you’re forking out and the cost vs. benefit equation for switching loans and/or lender.

Step 2: Can your mortgage work harder?
Are you throwing lump sums into the loan account when possible e.g. your tax return, bonus or leftover wage? Every cent counts in helping to reduce the interest owed and the loan term. Plus, contributing more when you can helps build a financial buffer for times of need. Perhaps you need to look at a different loan or a different loan structure to maximize the effectiveness of your mortgage

Step 3: Know your current mortgage rate?
You would be amazed how many home owners do not know what their current mortgage rate is.  How can you save money on your mortgage if you do not even kn ow what you are paying. It could be that you could save 1% or more by refinancing. If you can afford it you should pay more than your minimum mortgage payment as this will reduce your debt and increase the equity that you hold in your home.

Step 4: Cant afford to make all your repayments?
Consider repayment reduction strategies such as extending your loan term or debt consolidation. Keep in mind this will stretch your debt over a longer period, attracting interest with every extra month. You’ll need to weigh up the financial and emotional pros and cons beforehand.

Step 5: Do not know where your money is going?
Are you spending more money than necessary on transport, entertainment, takeaway food and other luxuries?  Why not create a  list of all your expenses to discover potential savings. Make a budget and stick to it.

Experts expect that Bad Debts will jump exponentially in Queensland as a result of floods.

All major banks as well as the Brisbane-based lenders – could take a significant hit as borrowers default on payments, costs rise and demand for new credit falls following the flood disaster.

In the short term there is an expectation of loan growth as the government, along with businesses and households devastated by the floods, turn to the formidable task of rebuilding.

Despite diversifying its business in recent years, BoQ is still holding a lot of local home loans which make up approximately two-thirds of its loan book.

Goldman Sachs analyst Ben Khoo expects athat loan arrears across Queensland will increase. It is unclear at this stage what the full impact will be.

“If banks decide to offer additional loans and an extention to the required repayment terms during the rebuild effort … we might actually see loan growth pick up.”

ANZ, CBA and Westpac said they would allow affected customers to cease repayments on home and other loans for up to three months.

A large number of Aussie families continue to struggle with the payment of small bills and accumulated debts. People often concentrate on making payments on large secured debts such as their mortgage or a car loan. They seem to place a smaller priority on paying other smaller bills, with dire consequences.

Many Australians don’t understand that forgetting to pay these “insignificant bills” can actually ruin their credit rating for up to seven years.

Any bill which is more than 60 days late can be referred as a listing with credit reporting agencies.  People find themselves unable to qualify for a personal loan because of a small paid default of $100.  A large number of people have unnecessary  defaults on their credit history due to unpaid accounts on utilities, phone, and rates bills.  It’s not until people apply for credit and are flatly refused that they begin to understand the very high cost associated with unpaid bills.

It is clear that government needs to do more to educate consumers about what their credit file is, how to check it, and how easy it is to receive default listings. With the introduction of banking reforms government should also introduce education programs for consumers to ensure that people understand that a $150 mobile bill may end up costing borrowers an extra 1% of their home loan of $500,000 for a period of 7 years – that is an unnecessary expense of $35,000.

According to trends identified by major debt collection players, Consumers are showing more interest than ever before to repay outstanding debts.

People are telling up they want to clear debts and start moving forward – said Matt Thomas, the chief executive of Collection House, one of the two dominant debt collection firms in Australia.

People are more diligent in servicing existing debts are looking to pay out whatever debts they can.

Collection House is offering all debtors with unpaid debts, however old, a discount to clear their old debts before the end of this year.

MasterCard have identified a drop in outstanding credit balances, and they are not alone in spotting this trend.

RBA data also showed a 10 per cent rise in the number of new debit card accounts, compared with a two per cent rise in new credit cards, down from growth of six per cent in recent years.

Both MasterCard and Collection House say early December is traditionally a time when people decide to settle some old debts before taking on new ones. This year the pattern is different, with households repaying one billion dollars more than usual on their outstanding credit card debt, and setting a new record.

Mortgage arrears in Australia are expected to grow in the next quarter as mortgage holders feel the pinch of earlier rate hikes.

According to a new report from Fitch Ratings, mortgage arrears in Australia dropped in the second quarter but, this will probably change in the third quarter, especially as a result of low doc borrowers already on maximum lvrs over-extending themselves to purchase a home.

While borrowers have been coping fine in past few months, the overall affect of several interest rate increase earlier this year as well as the expectation that new increases will come

“If so, arrears might increase further, and in the low doc conforming sector they might reach a new historical high.”

The number of borrowers that are more than 30 days behind on their mortgage repayments dropped to 1.32 per cent last quarter – down from 1.38 per cent.

Among low doc borrowers, arrears grew slightly in the second quarter – rising from 17.7 per cent in the first quarter to 18.2 per cent.

According to the latest research by Ratecity, Aussie household are holding $86.3 billion more debt this year than in 2009. While much of this debt is unsecured and therefore is not reflected in home loan commitment figures recently reported, credit cards and personal loan debt is higher than ever.

In an analysis of data from the Australian Prudential Regulatory Authority (APRA), RateCity found that households borrowed $771.3 billion in June – 12.6 per cent more than in the previous year $685 billion. This includes personal loans, credit cards, and owner occupied home loans.

The risk of over-borrowing is something that is greater today than this time last year. This is despite the interest rates being put up a number of times by the RBA over the past 12 months.