While bankruptcy has lots of financial repercussions, it certainly doesn’t signify the end of the world. Many individuals file for bankruptcy for different reasons, and this number only grows 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. Seeking bankruptcy advice is vital 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 means that you’re currently in the process of bankruptcy and are unable to secure any kind of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can acquire a loan with different specialist lenders. Bankruptcy typically lasts for three years but can be lengthened in some scenarios.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it very difficult to get a home loan approved once you are ultimately discharged. Whether you’ll have the ability to purchase a home after bankruptcy hinges on a number of factors, for instance the type of loan you’re looking for and how you take care of your credit rating once declared bankrupt. What is clear is that your spending capacity will be confined, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders offering home loans to borrowers 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 still an option for those that are serious. Much of the time, a larger deposit is needed and there are stricter terms and conditions in comparison to normal home loans.
There are lots of differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even provide reduced interest rates to those whose finances are in good shape and who have good rental history, if relevant. The amount of time between your discharge and loan application will also affect the result of your application. Two years is commonly advised. On top of that, sustaining a steady income and employment are also details which will be taken into account. Most bankrupt people will also proactively try to improve their credit rating immediately to decrease the burden of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Selecting a suitable lender is critical, so it’s a good idea to choose a lender that not only offers loans to discharged bankrupts but one that is prominent and respectable. By doing this, you will feel confident that you are securing reasonable terms and conditions and your application is more likely to be approved. There are a few unreliable lenders on the market that take advantage of the financially vulnerable, so please take care. Another significant factor to consider is that you should not apply to more than one lender simultaneously. Every loan application surfaces 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. Despite the fact that it may be complicated, it is still feasible 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. Basic tasks like paying your bills on time and producing steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Many lenders will not approve any loans to individuals that are undischarged to avoid jeopardizing any additional financial hardship.
Increased rates and fees. In general, interest rates and fees will be higher for discharged bankruptcy loans. You can only receive 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 does not imply that you’ll never own a home again. Due to the intricacy of bankruptcy, it’s critical to seek professional advice from the experts to guarantee you understand the process and therefore make sensible financial decisions. To find out more or to speak to someone about your scenario, contact Bankruptcy Experts Gympie on 1300 795 575 or visit Insolvency Gympie