Even though bankruptcy has many financial impacts, it certainly doesn’t mean the end of the world. Lots of people file for bankruptcy for different reasons, and this amount only intensifies with the difficult economic conditions that we experience today. According to data from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Seeking bankruptcy advice is necessary so you become informed of exactly what transpires financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you’re currently in the process of bankruptcy and are not able to obtain any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some circumstances.
Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it very challenging to get a home loan approved when you are ultimately discharged. Whether you will be able to purchase a home after bankruptcy rests on a range of factors, including the type of loan you’re seeking and how you handle your credit rating once declared bankrupt. What is clear is that your spending capacity will be restricted, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders supplying home loans to customers that have been discharged from bankruptcy for only one day. Even though the majority of these loans come with a higher interest rate and charges, they are nonetheless an option for individuals that are serious. In most cases, a bigger deposit is required and there are more stringent terms and conditions in comparison to standard home loans.
There are many differences amongst lenders for discharged bankruptcy loan approvals. A few lenders will even provide reduced rates to those whose finances are in good condition and who have good rental history, if relevant. The length of time between your discharge and loan application will also affect the outcome of your application. Two years is usually advised. On top of that, maintaining a stable income and employment are also components which will be taken into account. A lot of bankrupt people will also actively attempt to bolster their credit rating immediately to reduce the hardship of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Deciding on an appropriate lender is critical, so it’s a smart idea to choose a lender that not only grants loans to discharged bankrupts but one that is renowned and trustworthy. By doing this, you’ll feel comfortable that you are receiving decent 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 beware. 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 several applications all at once are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be tough, 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 demonstrates to the lenders that you’re 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 can’t get a loan until you are discharged. A lot of lenders will not approve any loans to individuals that are undischarged to avoid risking any additional financial distress.
Increased rates and fees. Normally, interest rates and fees will be increased for discharged bankruptcy loans. You can only acquire 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 be on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it does not mean that you’ll never own a home again. Because of the complexity of bankruptcy, it’s essential to seek professional advice from the experts to guarantee you understand the process and therefore make wise financial decisions. For additional information or to speak to someone about your circumstances, contact Bankruptcy Experts Maitland on 1300 795 575 or visit http://www.bankruptcyexpertsmaitland.com.au