When it comes to identifying lenders who specialize in non-conforming bad credit home loans, the borrower may be rather confused.

Most lenders have the following requirements:

(i) A large deposit of at least 20%;

(ii) Borrowers must be working and able to demonstrate income;

(iii) Security property needs to be in metropolitan postcodes;

(iv) Borrowers undischarged from part 9 or bankruptcy will not qualify until discharged;

(v) Borrowers with unpaid defaults will not qualify until defaults are repaid;

(vi) Borrowers with significant mortgage arrears – ie several months behind, will generally not qualify until they catch up on mortgage.

Having some history of bad credit when applying for a car loan is not a problem, however having a multitude of unpaid defaults, arrears or an undischarged bankruptcy/part 9 agreement would preclude you from qualifying for a bad credit car loan.

Lenders will expect that you have paid out all outstanding debts (or at least most of them) and have obtained you discharge from bankruptcy or part 9 agreement some months ago, not last week.

As with all car loans, you will need to be over 18 and an Australian Resident.

You will also need to be able to demonstrate a sound financial position as far as your place of residence and your income are concerned.

If unsure, do not make too many credit inquiries as these can only damage your credit history further. It is best that you contact one specialist and allow them to pre-qualify you and find you the best car loan deals available for your circumstances.

Certainly there are steps that can be taken by the holders of home loans to remedy this situation.

In working out a borrower’s affordability, lenders allocate up to 30% of the borrower income towards home loan repayments.

Home owners who are finding that more than 30% of their income is assigned to their mortgages are unlikely to sustain such a repayment burden for an extended period of time.

Approximately 140,000 of the 2.5 million households with variable rate mortgages are at least one month behind in repayments.

The best way not to find yourself in a situation of mortgage arrears and repayment difficulties is to borrow conservatively. The market has no expectations of extraordinary price increases in the near future, therefore unless you are able to repay your loans, you may experience negative equity and capital loss.

If your home loans are more expensive than they need necessarily be, it may be worth while to look at refinancing options However, if your home loan has already gone into arrears, the number of lenders that may be willing to consider your mortgage refinance application is likely to be rather limited.

Do not wait to do something until you are behind the a-ball. Talk to your lender as soon as possible.

Most Credit Repair specialist attempt to remove your bad credit off your credit report on a technicality. For example,

- You did not receive the required notice that the money was due;

- The debt did not belong to you and should not be on your report;

- The debt was repaid but report not updated etc.

It is important that if you are considering credit repair you understand the following:

- only bad credit that is one your report in error can be removed, ie. you are not able to pay a credit repair specialist to remove all bad credit off your credit report – most defaults, judgements can not be removed;

- there will be a fee applicable for credit repair and most credit repair agencies will charge this upfront.

The CBA survey confirms that the average Aussie borrows approximately 200 dollars per month in this way, mainly for unexpected expenses.

But around a quarter of the nearly two thousand people surveyed said they also asked someone they knew or a family member to help out financially when they ran out of money while waiting for their next paycheck. Many people who do not have close family or friends they can ask do utilize the services of cash lenders and payday lenders.

People living in capital cities were more than 3 times as likely to ask others for small loans than those living in the country – this is an indication of the living costs in cities and people struggling with staying on top of expenses.

Women borrowed almost twice as much as men, but most people turned to their mum as the first port of call.

Those that resort to payday loans generally find that they do return and re-borrow from same lender again and again.

According to the the National Centre for Social and Economic Modelling, 20% of young people aged 15 to 24 spend more than 30 % of their income on accommodation costs such as rents and home loans, compared with only 10% of the rest of the population who are in the same financial predicament.

Monash University student Hiba Casablanca pays around half of her weekly income on housing costs for her shared student house in Melbourne.

Ms Casablanca, who works part-time at the university and receives youth allowance for study, said the expense siphoned off money she would otherwise spend on other living expenses.

Like many other students she struggles financially and the high costs of accommodation do not help.

“Housing stress puts thousands of young people on the brink of financial crisis every single week,” said Sarah Toohey, campaign manager for AAH.

Australia’s housing market, considered among the priciest in the world, has driven up the cost of living and the cost of doing business in capital cities where the bulk of the population lives.

It really does not matter whether you are renting or a First Home Buyer, covering the costs of accommodation is extremely difficult for those only recently in the workforce and on a low income.

Furthermore First Home Buyers are also the victims of negative equity phenomenon that is facing many home owners in Australia – a situation where your home is worth less in the market that you owe the bank. When this occurs some people chose to simply walk away, leaving themselves with a history of bad credit and very little chance of home ownership in the future.

A Loan Market survey has found 17% of respondents believed holding onto their money was a safer financial move than investing in residential or commercial property, shares or savings. Consumer confidence is very low and they are more interested in not losing than they are in gaining. Preservation of existing assets creates a mindset that you should hold on to your money, repay your debts and do nothing.

The European Debt Crisis when combined with increasing local unemployment, high dollar, struggling manufacturing , retail and real-estate sectors. Even the finance Sector is reporting losses – Home Loans were down in February and will probably remain there for some months.

Commercial property was also not particularly popular with the poll’s respondents, with only 9% seeing it as the most profitable investment over the coming year. Naturally Commercial property is much more difficult to purchase as the buyer needs to have anywhere from 30% and up as a deposit to qualify for a commercial loan.

Majority of respondents expected shares to see the best returns, with 33% saying they would be most profitable. Thirty-one per cent tipped residential property as a sound investment, while 10% said cash or savings should be safe.

According to the ABS, 43.3 per cent of low income households said they would not be able to raise $2,000 for something important in a week.

Furthermore, only 17 per cent of these households said they could put some money aside towards savings from their income, while 46 per cent of medium to high income households said they would have no difficulty saving.

More than 10 per cent of low income households have had to at times go without meals due to cash flow problems, while 8 per cent had resorted to pawning or selling possessions.

Internet inquiries for debt assistance, debt consolidation and small bad credit loans are continually increasing – in yet another indication that the number of Australians unable to approach banks for loans is also on the increase.

Not withstanding a stable interest rate environment and low unemployment, the rate of mortgage arrears has increased from 1.52 per cent to 1.57 per cent.

“It is too early to judge which factors contributed to the increase in arrears during quarter four of 2011,” Fitch’s Structured Finance team James Zanesi said.

However the declining property values would have been a contributing factor.

Mr Zanesi said the housing market stagnation could impact the borrower who was hoping to refinance their home loans in order to access some equity to either help with repayments or debt consolidation.

Borrowers with the highest level of lvr on their home loans are the most significantly affected – some are suffering from negative equity.

The ratings agency is also predicting a deterioration in mortgage performance in the first quarter of this year’s seasonal Christmas spending, and minor increases in bank standard variable rates to outweigh the benefits of the two cash rates cuts late last year.

Banks appear to be relaxing their lending rules in order to bring in more home loan business.

The greater the amount that a borrower is able to access for their loans, the greater is the chance that they will find themselves in default and unable to maintain loan repayments.

Moody’s Investment Service senior analyst Arthur Karabatsos warned that mortgage defaults are highest in areas with this type of high loan-to-value ratio  borrowing, such as the outer suburbs of Sydney and Melbourne. Many buyers made their purchase on a special finance deal from the developer – ie. no deposit required. These buyers 12 months on are finding that they owe the bank more on their home loan than is the value of their home.

Commonwealth Bank, NAB and Westpac reduced deposit requirements to 5 per cent on some home loans this month.

Recent research from Dun & Bradstreet has identified that a little under half ( 41%)  of Australian households with children regularly need to turn to credit cards to come up with the extra funds necessary to cover monthly loan repayments. The result is up 2% on 2011.

Low-income households have been hardest hit. Forty-six per cent of low earners are expecting to come into trouble with repayment of loans and management of debts, up 8% from the fourth quarter of 2011 and 11 points above the national average.

Debts are building up faster for the consumers who can least afford these – ie the low income earners. Whereas those best able to meet credit commitments are holding back from spending money all together.

Of those households who find themselves unable to meet their obligations, 12% would default on either their home loans or internet bill, and 14% said they would choose to default on their pay TV account. Overall, 26% of families interviewed said they would default on a home loan payment if they found themselves in a difficult financial predicament.

Low income earners who are already in trouble are taking on more debt to just get by for another month.