While bankruptcy has various financial consequences, it certainly does not represent the end of the world. Lots of people file for bankruptcy for many reasons, and this number only intensifies with the harsh economic conditions that we see today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Finding bankruptcy advice is imperative so you become aware of exactly what happens financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you are still in the process of bankruptcy and are not able to secure any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can secure a loan with various specialist lenders. Bankruptcy usually lasts for three years but can be extended in some scenarios.
Unfortunately, the banks do not list the reasons for your bankruptcy and this can make it particularly difficult to get a home loan approved once you’re ultimately discharged. Whether you’ll be capable to buy a home after bankruptcy rests on several factors, like the kind of loan you’re looking for and how you take care of your credit rating once declared bankrupt. What’s certain is that your spending capability will be confined, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders granting home loans to borrowers that have been discharged from bankruptcy for only one day. While a lot of these loans have a higher interest rate and fees, they are still an option for those that are interested. In many cases, a larger deposit is needed and there are more stringent terms and conditions to standard home loans.
There are plenty of differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted rates to those whose finances are in good condition and who have excellent rental history, if applicable. The length of time between your discharge and loan application will equally influence the result of your application. Two years is usually advised. At the same time, maintaining a consistent income and employment are also variables which will be taken into consideration. Many bankrupt people will also actively attempt to bolster their credit rating quickly to reduce the burden of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Selecting a suitable lender is important, so it’s a good 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 will feel comfortable that you are securing decent terms and conditions and your application is more likely to be approved. There are a few dubious lenders on the market that take advantage of the financially vulnerable, so please be careful. Another significant variable to think about 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 difficult, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you’ve been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you’re 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 can’t acquire a loan until you are discharged. Most lenders will not approve any loans to those that are undischarged to avoid endangering any additional financial hardship.
Increased rates and fees. Normally, interest rates and fees will be higher for discharged bankruptcy loans. You can only get 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 indicate that you’ll never own a home again. Because of the complexity of bankruptcy, it’s vital to seek professional advice from the experts to ensure you understand the process and therefore make sound financial decisions. To find out more or to speak to someone about your circumstances, contact Bankruptcy Experts Coffs Harbour on 1300 795 575 or visit http://www.bankruptcyexpertscoffsharbour.com.au