Even though bankruptcy has various financial impacts, it surely does not represent the end of the world. Lots of folks file for bankruptcy for a number of reasons, and this figure only intensifies with the challenging economic conditions that we see today. According to information from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Seeking bankruptcy advice is critical 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 means that you are still in the process of bankruptcy and are not able to acquire any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can secure a loan with numerous specialist lenders. Bankruptcy generally lasts for three years however can be extended in some scenarios.
Unfortunately, the banks don’t list the reasons for your bankruptcy and this can make it very challenging to get a home loan approved when you’re eventually discharged. Whether you will have the capacity to buy a home after bankruptcy hinges on a range of factors, like the type of loan you’re after and how you take care of your credit rating once declared bankrupt. What’s certain is that your spending power will be reduced, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders supplying home loans to borrowers that have been discharged from bankruptcy for only one day. Although many of these loans feature a higher interest rate and charges, they are nonetheless an option for individuals that are serious. Most of the time, a bigger deposit is required and there are more stringent terms and conditions in comparison to normal home loans.
There are many differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply discounted rates to people whose finances are in good shape and who have good rental history, if relevant. The period of time between your discharge and loan application will additionally impact the outcome of your application. Two years is normally recommended. In addition, sustaining a stable income and employment are also aspects which will be taken into consideration. A lot of bankrupt people will also actively try to bolster their credit rating immediately to lower the hardship of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Selecting a suitable lender is essential, so it’s a smart idea to decide on a lender that not only provides loans to discharged bankrupts but one that is widely known and reputable. By doing this, you will feel comfortable that you are getting reasonable terms and conditions and your application is more likely to be approved. There are a number of untrustworthy lenders on the market that take advantage of the financially vulnerable, so please be careful. Another significant variable 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 several applications simultaneously are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Though it may be challenging, it is still feasible for discharged bankrupts to get a home loan approved.
The longer you have been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you’re financially responsible.
Your credit rating will improve. Straightforward 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. Many lenders will not approve any loans to people that are undischarged to avoid risking any further financial distress.
Increased rates and fees. Typically, 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 signify 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 ensure you understand the process and therefore make sound financial decisions. To learn more or to talk to someone about your circumstances, contact Bankruptcy Experts Mackay on 1300 795 575 or visit http://www.bankruptcyexpertsmackay.com.au