Even though bankruptcy has many financial repercussions, it certainly doesn’t suggest the end of the world. Many people file for bankruptcy for a number of reasons, and this number only escalates with the tough economic conditions that we encounter 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. Seeking bankruptcy advice is imperative so you become mindful of exactly what transpires financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you’re currently in the process of bankruptcy and are incapable to acquire any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can secure a loan with numerous specialist lenders. Bankruptcy normally lasts for three years however can be extended in some circumstances.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it very difficult to get a home loan approved when you are eventually discharged. Whether you will be able to buy a home after bankruptcy rests on several factors, such as the kind of loan you’re looking for and how you control your credit rating once declared bankrupt. What’s certain is that your spending ability will be limited, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders granting home loans to clients that have been discharged from bankruptcy for as little as one day. Even though many of these loans come with a higher interest rate and charges, they are still an option for people that are serious. In many cases, a bigger deposit is needed and there are stricter terms and conditions when compared to standard home loans.
There are many differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced rates to individuals whose finances are in good shape and who have good rental history, if relevant. The period of time between your discharge and loan application will likewise influence the outcome of your application. Two years is normally advised. Additionally, maintaining a stable income and employment are likewise factors which will be taken into consideration. Most bankrupt people will also actively attempt to strengthen their credit rating quickly to decrease the burden of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Picking out an appropriate lender is very important, so it’s a smart idea to go with a lender that not only offers loans to discharged bankrupts but one that is well-known and reputable. By doing this, you’ll feel confident that you are receiving decent terms and conditions and your application is more likely to be approved. There are a number of untrustworthy lenders on the market that exploit the financially vulnerable, so please take care. Another useful factor to take into account is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and numerous applications simultaneously 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 shows the lenders that you are financially responsible.
Your credit rating will improve. Effortless tasks like paying your bills on time and generating steady income will improve your credit rating.
You cannot get a loan until you are discharged. A lot of lenders will not approve any loans to individuals that are undischarged to avoid jeopardizing any further financial distress.
Increased rates and fees. Generally, interest rates and fees will be higher for discharged bankruptcy loans. You can only get 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 a pleasant experience, but it does not mean that you will never own a home again. Because of the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to guarantee you understand the process and therefore make wise financial decisions. For additional information or to talk to someone about your situation, contact Bankruptcy Experts Darwin on 1300 795 575 or visit https://www.bankruptcyexpertsdarwin.com.au