While bankruptcy has lots of financial consequences, it certainly does not represent the end of the world. Many folks file for bankruptcy for a number of reasons, and this amount only intensifies with the challenging economic conditions that we experience today. According to data from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is necessary so you become informed of exactly what happens financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you’re still in the process of bankruptcy and are incapable to acquire any type of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with various specialist lenders. Bankruptcy typically lasts for three years but can be extended in some situations.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved once you are ultimately discharged. Whether you will be able to buy a home after bankruptcy depends on several factors, for instance the kind of loan you’re after and how you manage your credit rating once declared bankrupt. What is clear is that your spending capacity 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 supplying home loans to customers that have been discharged from bankruptcy for only one day. Even though a lot of these loans come with a higher interest rate and charges, they are still an option for individuals that are interested. In many cases, a larger deposit is needed and there are stricter terms and conditions in comparison to normal home loans.
There are many differences between lenders for discharged bankruptcy loan approvals. A few lenders will even offer discounted interest rates to those people whose finances are in good shape and who have excellent rental history, if relevant. The period of time between your discharge and loan application will likewise affect the outcome of your application. Two years is generally advised. On top of that, maintaining a steady income and employment are also variables which will be taken note of. Many bankrupt individuals will also actively attempt to strengthen their credit rating promptly to lower the burden of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Selecting a suitable lender is critical, so it’s a good idea to select a lender that not only offers loans to discharged bankrupts but one that is prominent and respectable. By doing this, you’ll feel confident that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are a number of dubious lenders on the market that take advantage of the financially vulnerable, so please beware. Another valuable factor 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 numerous applications at the same time 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 challenging, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you have 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. Effortless 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. The majority of lenders will not approve any loans to people that are undischarged to prevent endangering any further financial hardship.
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 pleasant experience, but it does not imply that you will never own a home again. Because of the complexity of bankruptcy, it’s critical to seek professional advice from the experts to make certain you understand the process and therefore make prudent financial decisions. To learn more or to speak to someone about your situation, contact Bankruptcy Experts Taree on 1300 795 575 or visit http://www.bankruptcyexpertstaree.com.au