Even though bankruptcy has many financial consequences, it surely doesn’t suggest the end of the world. Lots of individuals file for bankruptcy for numerous reasons, and this amount only increases with the tough economic conditions that we witness today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Finding bankruptcy advice is essential so you become aware 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 still in the process of bankruptcy and are incapable to secure any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can acquire a loan with various specialist lenders. Bankruptcy typically lasts for three years however can be lengthened in some situations.
Sadly, 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’re eventually discharged. Whether you’ll have the capacity to purchase a home after bankruptcy rests on a number of factors, like the type of loan you’re looking for and how you handle your credit rating once declared bankrupt. What is definite is that your spending ability will be constricted, and repossession of property is typical.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders providing home loans to clients that have been discharged from bankruptcy for as little as one day. Whilst most of these loans come with a higher interest rate and fees, they are nonetheless an option for people that are serious. In most cases, a bigger deposit is needed and there are stricter terms and conditions to standard home loans.
There are lots of differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted rates to individuals 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 similarly affect the outcome of your application. Two years is normally advised. At the same time, maintaining a steady income and employment are likewise aspects which will be considered. Many bankrupt people will also proactively try to bolster their credit rating immediately to decrease the burden of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged
Selecting a suitable lender is key, so it’s a good idea to select a lender that not only offers loans to discharged bankrupts but one that is renowned and respectable. By doing this, you will 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 exploit the financially vulnerable, so please take care. Another significant variable to take into consideration is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and multiple applications simultaneously are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be difficult, it is still attainable 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’re financially responsible.
Your credit rating will improve. Basic tasks such as paying your bills on time and generating steady income will improve your credit rating.
You cannot 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. In general, interest rates and fees will be higher for discharged bankruptcy loans. You can only acquire 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasant experience, but it doesn’t indicate that you’ll never own a home again. As a result of the intricacy of bankruptcy, it’s imperative to seek professional advice from the experts to ensure you understand the process and therefore make sound financial decisions. For additional information or to talk to someone about your circumstances, contact Bankruptcy Experts Toowoomba on 1300 795 575 or visit Bankruptcy Experts Toowoomba