Although bankruptcy has lots of financial consequences, it certainly doesn’t represent the end of the world. Many people file for bankruptcy for many reasons, and this amount only intensifies with the difficult economic conditions that we experience today. According to data 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 crucial so you become mindful of exactly what happens 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 unable to acquire any kind of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy usually lasts for three years however can be extended in some scenarios.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it really challenging to get a home loan approved when you are ultimately discharged. Whether you will be able to buy a home after bankruptcy depends on a number of factors, including the kind of loan you’re seeking and how you control your credit rating once declared bankrupt. What is certain is that your spending ability will be confined, and repossession of property is typical.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders providing home loans to borrowers 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 still an option for people that are eager. In most cases, a bigger deposit is needed and there are stricter terms and conditions when compared to regular home loans.
There are various differences among lenders for discharged bankruptcy loan approvals. A few lenders will even provide reduced rates to those individuals whose finances are in good condition and who have good rental history, if applicable. The length of time between your discharge and loan application will also influence the result of your application. Two years is commonly recommended. On top of that, maintaining a steady income and employment are also aspects which will be taken into consideration. Many bankrupt people will also proactively attempt to bolster their credit rating quickly to lower the difficulty of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Picking out an appropriate lender is key, so it’s a smart idea to go with a lender that not only offers loans to discharged bankrupts but one that is prominent and credible. By doing this, you’ll feel comfortable that you are receiving decent terms and conditions and your application is more likely to be approved. There are a few suspicious lenders on the market that exploit the financially vulnerable, so please take care. Another significant variable to consider is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and several applications simultaneously are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be challenging, 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 demonstrates to the lenders that you are financially responsible.
Your credit rating will improve. Practical tasks like paying your bills on time and producing steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Most lenders will not approve any loans to those that are undischarged to prevent endangering any further financial hardship.
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 doesn’t indicate that you’ll never own a home again. Due to the complexity of bankruptcy, it’s imperative 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 speak to someone about your situation, contact Bankruptcy Experts Gosford on 1300 795 575 or visit http://www.bankruptcyexpertsgosford.com.au