If you are already behind in your bills, it is going to be very difficult to budget to pay $342 more a fortnight. That's an awful lot of money on a casual wage,/Centrelink especially with four kids.

And banks aren't scared to force you to sell up. If you don't have the equity in the property, then they can chase you for any money that you owe. So if you make a loss on the house and then owe say $25,000 (not unrealistic) then you have to pay rent, plus the repayments on that $25,000, plus your credit rating is wrecked.

In your situation, I'd save save save, but also look at renting somewhere else for a year or so, to get out of the whole issue with MIL. The idea of putting aside the extra $342 minimum each fortnight is great, plus $20 per week in rates and $100/month in building/contents insurance. It all adds up, unfortunately.

The only other thing I could think of is, do you HAVE to live in the area where the houses are $300K? Can you move to the country where some houses are as little as $55K (country western Victoria?) This looks much more achievable from your budget perspective, you'd pay off that $55K very quickly with a small deposit and paying the amount you are paying now in rent.

Good luck.