Whilst bankruptcy has lots of financial consequences, it certainly does not represent the end of the world. Lots of people file for bankruptcy for numerous reasons, and this amount only escalates with the challenging economic conditions that we witness today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is imperative so you become informed of exactly what happens financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you’re currently in the process of bankruptcy and are unable to acquire any kind of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can secure a loan with different specialist lenders. Bankruptcy normally lasts for three years but can be extended in some situations.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it really difficult to get a home loan approved once you are eventually discharged. Whether you will have the ability to purchase a home after bankruptcy relies on various factors, for instance the type of loan you’re looking for and how you handle your credit rating once declared bankrupt. What’s definite is that your spending capacity will be constricted, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders granting home loans to customers that have been discharged from bankruptcy for only one day. While the majority of these loans come with a higher interest rate and fees, they are nevertheless an option for those that are eager. In most cases, a bigger deposit is required and there are stricter terms and conditions to regular home loans.
There are numerous differences amongst lenders for discharged bankruptcy loan approvals. Some lenders will even supply discounted rates to those people whose finances are in good condition and who have good rental history, if applicable. The period of time between your discharge and loan application will also affect the result of your application. Two years is typically advised. Equally, maintaining a steady income and employment are also matters which will be taken into account. Most bankrupt people will also make an effort to try to increase their credit rating quickly to decrease the strain of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Selecting an appropriate lender is key, so it’s a smart idea to go with a lender that not only offers loans to discharged bankrupts but one that is renowned and trusted. By doing this, you’ll feel comfortable that you’re receiving fair terms and conditions and your application is more likely to be approved. There are a few questionable lenders on the market that exploit the financially vulnerable, so please be careful. Another key factor to take into consideration is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and numerous applications simultaneously are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Though it may be difficult, it is still attainable for discharged bankrupts to get a home loan approved.
The longer you have been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you’re financially responsible.
Your credit rating will improve. Practical tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t obtain a loan until you are discharged. A large number of lenders will not approve any loans to individuals that are undischarged to prevent jeopardizing any further financial hardship.
Increased rates and fees. Normally, interest rates and fees will be higher for discharged bankruptcy loans. You can only get lower interest rates with a bigger deposit.
Record of bankruptcy. You will have a record of bankruptcy on your credit history for seven years after discharge, and your name will always appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never an enjoyable experience, but it does not imply that you will never own a home again. Because of the intricacy of bankruptcy, it’s crucial to seek professional advice from the experts to make certain you understand the process and therefore make prudent financial decisions. To learn more or to talk with someone about your situation, contact Bankruptcy Advice on 1300 879 867 or visit https://www.bankruptcy-advice.com.au