Although bankruptcy has plenty of financial repercussions, it surely does not mean the end of the world. Many individuals file for bankruptcy for numerous reasons, and this number only escalates with the challenging economic conditions that we see today. According to statistics 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 vital 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’re currently in the process of bankruptcy and are not able to secure any type 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 extended in some scenarios.
Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it really difficult to get a home loan approved once you are ultimately discharged. Whether you’ll be able to purchase a home after bankruptcy hinges on various factors, like the kind of loan you’re looking for and how you handle your credit rating once declared bankrupt. What’s definite is that your spending capability will be restricted, and repossession of property is typical.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders granting home loans to customers that have been discharged from bankruptcy for as little as one day. Though a lot of these loans have a higher interest rate and fees, they are nonetheless an option for people that are interested. Much of the time, a bigger deposit is needed and there are more stringent terms and conditions to normal home loans.
There are numerous differences among lenders for discharged bankruptcy loan approvals. A few lenders will even supply discounted interest rates to individuals whose finances are in good condition and who have good rental history, if relevant. The period of time between your discharge and loan application will additionally affect the end result of your application. Two years is normally recommended. In addition, maintaining a regular income and employment are also variables which will be taken into consideration. Many bankrupt people will also proactively attempt to strengthen their credit rating immediately to reduce the hardship of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Picking out a suitable lender is crucial, so it’s a smart idea to choose a lender that not only offers loans to discharged bankrupts but one that is recognised and credible. By doing this, you’ll feel comfortable that you’re 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 be careful. Another key 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 at the same time are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be tough, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you’ve been discharged, the easier it gets. Spending time rebuilding 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 generating steady income will improve your credit rating.
You cannot obtain a loan until you are discharged. Many lenders will not approve any loans to those that are undischarged to prevent risking any further financial distress.
Increased rates and fees. Generally, interest rates and fees will be higher for discharged bankruptcy loans. You can only obtain 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it does not 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 sure you understand the process and therefore make wise financial decisions. To find out more or to talk with someone about your scenario, contact Bankruptcy Experts Hobart on 1300 795 575 or visit http://www.bankruptcyexpertshobart.com.au