Although bankruptcy has various financial consequences, it certainly does not suggest the end of the world. Lots of people file for bankruptcy for plenty of reasons, and this amount only intensifies with the challenging economic conditions that we experience 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. Seeking bankruptcy advice is vital 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 means that you’re currently in the process of bankruptcy and are incapable to secure any kind of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can obtain a loan with different specialist lenders. Bankruptcy generally lasts for three years but can be lengthened in some scenarios.
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’ll have the ability to purchase a home after bankruptcy hinges on various factors, for instance the kind of loan you’re looking for and how you control your credit rating once declared bankrupt. What is clear is that your spending ability will be confined, and repossession of property is common.
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 only one day. Though the majority of these loans come with a higher interest rate and charges, they are still an option for individuals that are interested. In many cases, a bigger deposit is needed and there are more stringent terms and conditions when compared to regular home loans.
There are various differences amongst lenders for discharged bankruptcy loan approvals. Some lenders will even offer reduced interest rates to people whose finances are in good condition and who have excellent rental history, if applicable. The period of time between your discharge and loan application will equally influence the result of your application. Two years is usually recommended. Furthermore, maintaining a steady income and employment are likewise factors which will be taken note of. Many bankrupt people will also actively attempt to bolster their credit rating immediately to decrease the difficulty of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged
Picking out a suitable lender is crucial, so it’s a good idea to go with a lender that not only provides loans to discharged bankrupts but one that is prominent and trustworthy. By doing this, you’ll feel comfortable that you’re getting reasonable terms and conditions and your application is more likely to be approved. There are a number of unreliable lenders on the market that exploit the financially vulnerable, so please take care. Another key variable to take into consideration is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and multiple applications all at once are seen 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 conceivable 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. Straightforward tasks such as paying your bills on time and producing steady income will improve your credit rating.
You cannot get a loan until you are discharged. Many lenders will not approve any loans to people that are undischarged to avoid risking any additional financial distress.
Increased rates and fees. Typically, 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 be on the National Personal Insolvency Index (NPII).
Bankruptcy is never an enjoyable experience, but it doesn’t mean that you will never own a home again. Because of the complexity of bankruptcy, it’s imperative to seek professional advice from the experts to make certain you understand the process and therefore make sensible financial decisions. To find out more or to talk to someone about your circumstances, contact Bankruptcy Experts Tweed Coast on 1300 795 575 or visit Bankruptcy Tweedcoast