Even though bankruptcy has many financial repercussions, it certainly does not represent the end of the world. Many people file for bankruptcy for many reasons, and this figure only escalates with the challenging economic conditions that we observe today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is necessary so you become aware of exactly what transpires financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are currently in the process of bankruptcy and are not able to secure any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can acquire a loan with several specialist lenders. Bankruptcy normally lasts for three years but can be extended in some circumstances.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it really challenging to get a home loan approved when you are ultimately discharged. Whether you’ll be able to buy a home after bankruptcy rests on a range of factors, like the type of loan you’re after and how you control your credit rating once declared bankrupt. What is certain is that your spending capacity will be confined, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders granting home loans to customers that have been discharged from bankruptcy for only one day. Whilst a lot of these loans come with a higher interest rate and fees, they are nevertheless an option for those that are eager. Most of the time, a bigger deposit is needed and there are more stringent terms and conditions compared to normal home loans.
There are plenty of differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted rates to those individuals whose finances are in good shape and who have good rental history, if applicable. The period of time between your discharge and loan application will similarly influence the result of your application. Two years is usually advised. Equally, maintaining a stable income and employment are likewise factors which will be considered. Many bankrupt individuals will also make an effort to try to bolster their credit rating promptly to decrease the burden of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Deciding on a suitable lender is very important, so it’s a smart idea to decide on a lender that not only grants loans to discharged bankrupts but one that is renowned and credible. By doing this, you will feel comfortable that you’re receiving reasonable terms and conditions and your application is more likely to be approved. There are several dubious lenders on the market that take advantage of the financially vulnerable, so please beware. Another significant variable to consider is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and several applications simultaneously are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be tough, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you’ve been discharged, the easier it gets. Spending time restoring your finances demonstrates to the lenders that you are financially responsible.
Your credit rating will improve. Simple tasks such as paying your bills on time and producing steady income will improve your credit rating.
You cannot obtain a loan until you are discharged. Many lenders will not approve any loans to those that are undischarged to avoid risking any further financial hardship.
Increased rates and fees. Usually, interest rates and fees will be higher for discharged bankruptcy loans. You can only get lower interest rates with a larger 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 a pleasurable experience, but it doesn’t suggest that you will never own a home again. As a result of the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make sure you understand the process and therefore make wise financial decisions. For more details or to talk to someone about your scenario, contact Bankruptcy Experts Port Stephens on 1300 795 575 or visit http://www.bankruptcyexpertsportstephens.com.au