Even though bankruptcy has plenty of financial impacts, it certainly does not represent the end of the world. Lots of people file for bankruptcy for plenty of reasons, and this number only increases with the tough economic conditions that we observe today. According to statistics 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 imperative so you become aware of exactly what transpires financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you’re still 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 numerous specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some scenarios.
Unfortunately, the banks don’t provide the reasons for your bankruptcy and this can make it very challenging to get a home loan approved once you are eventually discharged. Whether you will be capable to purchase a home after bankruptcy rests on a number of factors, such as the kind of loan you’re looking for and how you manage your credit rating once declared bankrupt. What’s certain is that your spending capability will be limited, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders offering home loans to customers that have been discharged from bankruptcy for as little as one day. Though the majority of these loans feature a higher interest rate and fees, they are still an option for individuals that are interested. In many cases, a bigger deposit is needed and there are more stringent terms and conditions when compared to regular home loans.
There are plenty of differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer reduced rates to those whose finances are in good shape and who have good rental history, if applicable. The period of time between your discharge and loan application will additionally impact the end result of your application. Two years is usually advised. In addition, sustaining a stable income and employment are likewise factors which will be taken into account. A lot of bankrupt people will also make an effort to try to bolster their credit rating immediately to minimise the difficulty of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged
Selecting an appropriate lender is essential, so it’s a good idea to decide on a lender that not only provides loans to discharged bankrupts but one that is prominent and trustworthy. By doing this, you’ll feel comfortable that you’re securing fair terms and conditions and your application is more likely to be approved. There are some untrustworthy lenders on the market that exploit the financially vulnerable, so please beware. Another important factor to consider is that you should not apply to more than one lender at a time. Every loan application surfaces 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. 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 shows the lenders that you’re financially responsible.
Your credit rating will improve. Simple tasks like paying your bills on time and generating steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Almost all lenders will not approve any loans to people that are undischarged to avoid endangering any additional financial hardship.
Increased rates and fees. Usually, interest rates and fees will be higher for discharged bankruptcy loans. You can only acquire 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasant experience, but it does not signify that you’ll never own a home again. As a result of the intricacy of bankruptcy, it’s essential 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 talk to someone about your circumstances, contact Bankruptcy Experts Perth on 1300 795 575 or visit Bankruptcy Perth