Even though bankruptcy has various financial repercussions, it certainly does not mean the end of the world. Many folks file for bankruptcy for many reasons, and this number only intensifies with the challenging economic conditions that we see today. According to information 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 imperative so you become informed of exactly what transpires financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you are currently in the process of bankruptcy and are unable to acquire any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with various specialist lenders. Bankruptcy normally lasts for three years but can be lengthened in some instances.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it really difficult to get a home loan approved when you are eventually discharged. Whether you’ll be able to buy a home after bankruptcy depends on various factors, like the kind of loan you’re looking for and how you handle your credit rating once declared bankrupt. What is clear is that your spending ability will be constricted, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders supplying home loans to clients that have been discharged from bankruptcy for as little as one day. Even though many of these loans feature a higher interest rate and fees, they are nevertheless an option for people that are interested. Most of the time, a bigger deposit is required and there are stricter terms and conditions to normal home loans.
There are lots of differences amongst lenders for discharged bankruptcy loan approvals. A few lenders will even supply discounted interest rates to those individuals 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 likewise impact the outcome of your application. Two years is typically recommended. Equally, sustaining a consistent income and employment are likewise factors which will be considered. Many bankrupt people will also make an effort to try to strengthen their credit rating immediately to reduce the strain of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Picking out an appropriate lender is important, so it’s a good idea to go with a lender that not only offers loans to discharged bankrupts but one that is well-known and credible. By doing this, you’ll feel comfortable that you are securing fair terms and conditions and your application is more likely to be approved. There are a number of questionable lenders on the market that take advantage of the financially vulnerable, so please take care. Another valuable variable to take into consideration is that you should not apply to more than one lender at a time. Every loan application surfaces on your credit history, and multiple applications at the same time are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although 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 shows 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 cannot obtain a loan until you are discharged. A large number of lenders will not approve any loans to people that are undischarged to prevent jeopardizing any further financial distress.
Increased rates and fees. Normally, interest rates and fees will be higher for discharged bankruptcy loans. You can only obtain 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 a pleasant experience, but it does not suggest that you’ll never own a home again. Due to the intricacy of bankruptcy, it’s vital to seek professional advice from the experts to make sure you understand the process and therefore make sensible financial decisions. For more information or to talk with someone about your scenario, contact Bankruptcy Experts Australia on 1300 795 575 or visit http://www.bankruptcyexpertsaustralia.com.au