While bankruptcy has a lot of financial repercussions, it surely does not signify the end of the world. Many people file for bankruptcy for numerous reasons, and this number only grows with the difficult economic conditions that we observe today. According to information from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Finding bankruptcy advice is essential so you become informed of exactly what transpires financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you are still in the process of bankruptcy and are unable to acquire any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy typically lasts for three years however can be lengthened in some instances.
Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved when you are ultimately discharged. Whether you’ll have the ability to purchase a home after bankruptcy depends on various factors, like the type of loan you’re after and how you handle your credit rating once declared bankrupt. What’s certain is that your spending power 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 offering home loans to customers that have been discharged from bankruptcy for as little as one day. Whilst many of these loans have a higher interest rate and fees, they are nonetheless an option for those that are serious. In most cases, a bigger deposit is required and there are more stringent terms and conditions to standard home loans.
There are many differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted rates to those individuals whose finances are in good condition and who have good rental history, if applicable. The period of time between your discharge and loan application will also influence the end result of your application. Two years is generally advised. Furthermore, sustaining a stable income and employment are likewise matters which will be considered. Many bankrupt people will also proactively attempt to increase their credit rating promptly to reduce the strain of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Deciding on an appropriate lender is essential, so it’s a good idea to choose a lender that not only provides loans to discharged bankrupts but one that is renowned and trusted. By doing this, you will feel confident that you’re securing decent 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 be careful. Another valuable factor to consider is that you should not apply to more than one lender at a time. Every loan application surfaces on your credit history, and several applications at the same time 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 restoring your finances shows the lenders that you’re financially responsible.
Your credit rating will improve. Straightforward tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t receive a loan until you are discharged. Most lenders will not approve any loans to those that are undischarged to prevent risking any further financial distress.
Increased rates and fees. Usually, 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 mean that you’ll never own a home again. As a result of the intricacy of bankruptcy, it’s essential to seek professional advice from the experts to guarantee you understand the process and therefore make prudent financial decisions. For additional information or to speak with someone about your situation, contact Bankruptcy Experts Dubbo on 1300 795 575 or visit http://www.bankruptcyexpertsdubbo.com.au