Even though bankruptcy has lots of financial consequences, it certainly doesn’t signify the end of the world. Many individuals file for bankruptcy for plenty of reasons, and this amount only grows with the tough economic conditions that we witness today. According to data from the Australian Financial Security Authority (AFSA), there were 7,466 cases of bankruptcy in Australia in the September 2014 quarter alone. Finding bankruptcy advice is crucial so you become aware of exactly what happens financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you’re still in the process of bankruptcy and are unable to secure any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with several specialist lenders. Bankruptcy typically lasts for three years however can be lengthened in some scenarios.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it considerably challenging to get a home loan approved once you’re ultimately discharged. Whether you will have the capacity to buy a home after bankruptcy depends on several factors, such as the kind of loan you’re after and how you handle your credit rating once declared bankrupt. What’s certain is that your spending capacity will be confined, and repossession of property is typical.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders providing home loans to customers that have been discharged from bankruptcy for as little as one day. Although many of these loans come with a higher interest rate and charges, they are still an option for those that are eager. In most cases, a bigger deposit is needed and there are stricter terms and conditions compared to normal home loans.
There are various differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced rates to individuals whose finances are in good condition and who have good rental history, if relevant. The amount of time between your discharge and loan application will equally affect the result of your application. Two years is usually recommended. Equally, sustaining a consistent income and employment are likewise matters which will be taken into account. A lot of bankrupt people will also make an effort to attempt to strengthen their credit rating promptly to minimise the difficulty of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Selecting a suitable lender is key, so it’s a smart idea to decide on a lender that not only grants loans to discharged bankrupts but one that is prominent and trusted. By doing this, you’ll feel confident that you’re getting fair terms and conditions and your application is more likely to be approved. There are a number of questionable lenders on the market that exploit the financially vulnerable, so please take care. Another useful factor to think about is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and multiple applications all at once are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be challenging, it is still attainable 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. Effortless tasks like paying your bills on time and producing steady income will improve your credit rating.
You cannot obtain a loan until you are discharged. Most lenders will not approve any loans to those that are undischarged to prevent risking any additional financial distress.
Increased rates and fees. Generally, interest rates and fees will be higher for discharged bankruptcy loans. You can only acquire 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 be on the National Personal Insolvency Index (NPII).
Bankruptcy is never an enjoyable experience, but it does not indicate that you will never own a home again. As a result of the intricacy of bankruptcy, it’s vital to seek professional advice from the experts to make sure you understand the process and therefore make sound financial decisions. For additional information or to speak with someone about your situation, contact Bankruptcy Experts Whitsundays on 1300 795 575 or visit https://www.bankruptcyexpertswhitsundays.com.au