Even though bankruptcy has many financial consequences, it certainly doesn’t suggest the end of the world. Many people file for bankruptcy for different reasons, and this number only intensifies with the harsh economic conditions that we encounter today. According to statistics from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is crucial so you become aware of exactly what happens financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are currently in the process of bankruptcy and are not able to obtain any type of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can secure a loan with several specialist lenders. Bankruptcy generally lasts for three years however can be lengthened in some instances.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it really challenging to get a home loan approved once you’re eventually discharged. Whether you will be capable to buy a home after bankruptcy depends on several factors, like the kind of loan you’re after and how you deal with your credit rating once declared bankrupt. What is definite is that your spending ability will be confined, and repossession of property is common.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders offering home loans to clients that have been discharged from bankruptcy for only one day. Though a lot of these loans feature a higher interest rate and charges, they are nonetheless an option for people that are interested. In many cases, a bigger deposit is needed and there are stricter terms and conditions compared to regular home loans.
There are lots of differences between lenders for discharged bankruptcy loan approvals. A few lenders will even offer discounted interest rates to those whose finances are in good shape and who have good rental history, if relevant. The length of time between your discharge and loan application will additionally impact the outcome of your application. Two years is typically advised. Additionally, maintaining a consistent income and employment are likewise matters which will be taken into consideration. Many bankrupt individuals will also proactively attempt to improve their credit rating immediately to minimise the difficulty of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Picking out 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 widely known and trustworthy. By doing this, you will feel confident that you are getting decent terms and conditions and your application is more likely to be approved. There are some untrustworthy lenders on the market that take advantage of the financially vulnerable, so please be careful. Another useful variable to consider is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and several applications all at once are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be complicated, 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. Straightforward tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t acquire a loan until you are discharged. A lot of lenders will not approve any loans to individuals that are undischarged to avoid jeopardizing any additional financial hardship.
Increased rates and fees. Generally, interest rates and fees will be increased for discharged bankruptcy loans. You can only receive 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 pleasurable experience, but it does not mean that you will never own a home again. As a result of the intricacy of bankruptcy, it’s vital to seek professional advice from the experts to ensure you understand the process and therefore make wise financial decisions. To find out more or to speak to someone about your scenario, contact Bankruptcy Experts Port Macquarie on 1300 795 575 or visit http://www.bankruptcyexpertsportmacquarie.com.au