A full time office worker, David, was earning a good salary and comfortably servicing his mortgage and loans whilst also providing a comfortable life for himself and his family. However, an unexpected medical condition forced David to leave work for nearly six months for treatment and respite.

On top of this stress, the family were forced to live off credit cards during the period of David’s illness as David was the sole income earner of the family. Not being in any position to pay off his loans, David’s car and home loans eventually defaulted.

A breakdown of David’s loans looked like this:
- Mortgage: $202,000 at $1550 per calendar month
- Credit Card: $22,000 at $660 pcm (also in default with debt agreement, with a $10,000 fee to pay to close the account).
- Car Loan 1: $30,000 at $390 pcm (3 months behind)
- Car Loan 2: $29,000 at $900 pcm (3 months behind)

Simply put:
- Home Value: $330,000
- Total Loans: $254,000
- Current repayments: $3500

Critical considerations in David’s situation were:
- The bank was ready to foreclose on David’s home and car loans.
- The credit card company was willing to charge David the $10,000 account closing fee despite his situation.

Once David had recovered and was back at work, he realised that it would be impossible for him to try to pay off his defaulted loans and that he needed financial help to get back on track. Initially a number of loan applications David made through some traditional lenders were rejected. David was then advised by a close friend to look into securing a debt consolidation loan.

Debt consolidation specialists were then able to assess David’s situation and work out the following solution – to refinance all of David’s loans into one:

- Loan: $254,000
- Repayment: $2438

By reducing his monthly outgoing funds by nearly $1000, and getting the lenders off his back, David was able to alleviate the financial stress and move forward.

If you find yourself reading David’s story and relating to his situation, you should consider getting to know more about how a debt consolidation loan could help you. Many families have been helped just as David was by refinancing through a debt consolidation specialist.

For more information see ‘Debt Consolidation Loans – The Facts’.

Most of us have heard the term ‘debt consolidation’ but may be unsure what it really means or how it may be of help in certain financial situations. Modern life is full of pressures, with money matters being a concern for many people. Juggling loans – mortgages, car loans, credit cards – can be difficult and it can only take one unexpected event, such as an illness or loss of employment, to suddenly throw someone into financial problems. In such situations, maintaining a good credit rating can be difficult, which is why understanding your options and how a debt consolidation loan might help is so important.

But what is a debt consolidation loan? Simply put, a debt consolidation loan allows you to roll all your separate loans into a single loan. This allows you to make one regular payment on this loan rather than having to juggle numerous repayments on various loans. Loans can be consolidated into one regardless of whether you are up-to-date with repayments or not, and the consolidated loan may have lower monthly or fortnightly repayments. It is easy to fall behind on payments due to an unexpected illness of loss of employment, however if the situation gets out of hand and payments are not made for three or four months this could lead to a bad credit rating. The importance of a good credit rating cannot be underestimated as it is generally the deciding factor when lenders are considering a loan application.

To see an example of how a debt consolidation loan can help, please see the article: ‘Debt Consolidation Loans – an example’.

Home ownership is an aspiration of most middle class families today. Owning a home gives you a place which you can truly call your own. Unfortunately this dream cannot be realised by many people, and problems in securing loans due to a bad credit history is one of the main reasons for this.

Your credit record is established once you make your first loan application. A good credit rating is achieved if you are able to make all your repayments at regular intervals as stipulated in the initial contractual agreement you made on securing the loan or line of credit. However, late or defaulted payments of 90 days or more can be listed on your credit report and failure to keep up to date can result in a bad credit rating. The importance of a good credit rating cannot be underestimated as it is generally the deciding factor when lenders are considering a loan application.

For more information on ‘the bad credit trap ‘ please see this article.

Unexpected circumstances, such as illness or loss of employment, or a lack of a proper understanding of the rules and regulations of loan providers can suddenly see someone with a good credit rating get caught in the bad credit trap. With other life pressures and stress, it’s easy to occasionally neglect financial obligations. This however can slowly but steadily lead to a bad credit rating which may restrict a person’s future financial options in regard to loans and mortgages.

Past loan defaults or arrears may be listed on your credit rating, making it difficult to gain approval for any future mortgage applications with traditional lenders. Unfortunately such lenders work under the idea that past loan defaults will certainly equal future defaults.

But don’t worry, there are still options available to you if you are looking to secure a loan with a bad credit history. Specialist lenders who deal with bad credit loans can give you help and advice about refinancing.

Such companies have a better knowledge and understanding of your situation and will be able to tell you if you are eligible to apply for a bad credit loan. They are also able to look into any other financial options available to you.

But what exactly is a ‘bad credit loan’? As the name suggests, it’s a loan specifically for people who, for whatever reason, have a bad credit rating and therefore are unable to secure a loan through traditional lenders who specify the need for a good credit rating in their application process.

There are two types of bad credit loan – secured and unsecured. A secured loan uses your property as security or equity to secure finance. An unsecured loan does not require this type of security and therefore is a more difficult loan to secure. A refinancing company will be able to advise what type of loan you qualify for.

For more information, see the article ‘Bad Credit Rating Importance’.

A bad credit loan can help if you find yourself caught in the bad credit trap. Contacting a refinancing specialist for help and advice is a great first step to getting back in control of your finances. Owning your own home should not be just a dream, so stop the stress and gain control.

Regardless of nationality, age or gender, everyone strives to live a happy and stress free life. Unfortunately the pressures of work and finances all too easily get in the way of the pleasures of starting a family or business and enjoying life.

Often money and financial concerns are the biggest causes of stress in modern life. Increasingly people are getting caught by the tax debt trap, as easy credit and money pressures pile up. The feelings of being in debt and being harassed by debt collectors are becoming all too common. Tax collectors ring at all hours and may even start making house calls – it’s enough to make anyone lose sleep.

But there is a way out of tax debt. Please see the article ‘Refinancing tax debt’ for more information.

To understand the pressures of tax debt and what can be done, let’s look at the following example.

Paul is an entrepreneurial businessman who runs his own company selling wholesale tractor equipment from a rented office space. Due to the rapid growth of his business, Paul planned to expand, and started to consider his professional and personal future possibilities. Unfortunately for Paul, he made a few crucial mistakes in his planning.

By underestimating the importance of his tax responsibilities, Paul eventually accrued a substantial tax debt in failing to pay his ongoing tax dues for the business. Taxation officers soon became more interested in his business and his tax debts.

It got to the point where Paul had to think about refinancing his mortgage in order to pay off these debts, however due to his financial situation many traditional lenders would not accept his loan applications. As the amount Paul needed to borrow was more than 80% of the value of his home (or  above 80% Loan to Value Ratio, (LVR)), the lender’s mortgage insurers also had issues with Paul’s loan application.

Thankfully though there are specialist who deal with supporting small businesses and refinancing for tax debts. There is a range of lenders able to provide loan packages for scenarios just like Paul’s. In contacting a specialist refinancing company, Paul’s case was put to a number of specialist lenders.

A positive outcome for Paul eventually involved increasing his existing mortgage (from $280,000 to $350,000), which was 90% of the Loan to Value Ratio for his property, allowing him to pay off his tax debts. This was a possibility as the specialist refinancing company was able to find Paul a specialist lender who did not require mortgage insurance and were experienced in dealing with cases just like Paul’s.

It’s normal to be stressed out about tax debt but there are ways to get out of the tax debt trap.

Readers of this blog have queried some of the terms and language used in the mortgage and financial industries. Terms which you will often see popping up on this blog are ‘mortgage arrears’ and ‘home loan arrears’.

When home loan or mortgage repayments are not made on time they are referred as ‘mortgage arrears’ or ‘home loan arrears ‘. As part of the initial contract made with financial institutions, borrowers are required to agree to make certain repayments on their loan at regular intervals. The borrower is then contractually obliged to meet these repayments. If these repayments fail to be met, it is considered a breaking of the initial contractual agreement and is officially known as a ‘mortgage arrears’ or ‘home loan arrears ‘.

What causes mortgage arrears ? Click here for more information or see our FAQ section, ‘What is a mortgage arrears ?’.

If you have further questions  feel free to Contact us.

A mortgage arrears generally occurs as the result of an unexpected change to a person’s professional or personal life. A change in circumstances, such as the loss of employment, a death or illness in the family, or a separation/divorce can cause borrowers to be unable to repay their debts as they had in the past. The financial stress of falling behind on repayments only compounds the stress of such events making it important to get the proper advice, help and support.

Such unexpected, and often unplanned for, events can have a greater impact than you may think. For example, the serious illness of a spouse or partner could easily result in the loss of three-quarters of the household income, as one partner reduces work hours to care for the other. Such a reduction of income would quickly put any family into financial difficulty. With home, car and credit card debts, the sudden and unexpected loss of income can have devastating effects.

It can be hard work to get back on track financially in the instance of a mortgage or other loan falling into arrears but it certainly isn’t impossible. Looking at the above example more closely, the different repayments due such as Home Loan ($1400 per calendar month), two car loans ($400 pcm each), and three credit cards ($600 pcm) could cause serious financial stress if repayments were to fall behind.

The above example is based on everyday situations that families across Australia face but there is help available. A debt consolidation mortgage or bad credit loan could provide help for people who find themselves with an unexpected mortgage or loan arrears.

See the ‘What is a home loan arrears?’ FAQ for more information.

Firstly, don’t worry, you’re not alone. Although Australia has not been hit as hard as the United States by the high rate of mortgage arrears, statistics show that many Australian families are experiencing difficulty in meeting mortgage repayments. In fact, the number of people behind on their mortgage has doubled in Australia in the past three years, with New South Wales being the state hardest hit by mortgage arrears.

Possible contributing factors to this rise in mortgage arrears include looser restrictions on credit application policies, the ability to borrow more based on your income and equity, and higher acceptable Loan to Value Ratios (LVRs).

If you need help when behind on your mortgage payment, please contact us for more advice, or apply for a loan through Bad credit Loans.
Contact Us if you are looking for Help when Behind on Mortgage Payment or Simply Apply for a Loan now.