Even though bankruptcy has many financial repercussions, it certainly does not signify the end of the world. Many individuals file for bankruptcy for different reasons, and this amount only grows with the difficult economic conditions that we witness today. According to data 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 crucial so you become informed of exactly what happens financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy signifies that you are still in the process of bankruptcy and are unable to obtain any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can secure a loan with various specialist lenders. Bankruptcy normally lasts for three years however can be lengthened in some situations.
Unfortunately, the banks don’t list the reasons for your bankruptcy and this can make it considerably difficult to get a home loan approved when you’re eventually discharged. Whether you’ll have the capacity to purchase a home after bankruptcy hinges on various factors, such as the type of loan you’re looking for and how you take care of your credit rating once declared bankrupt. What’s clear is that your spending capability will be limited, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders supplying home loans to customers that have been discharged from bankruptcy for as little as one day. Whilst a lot of these loans have a higher interest rate and fees, they are nevertheless an option for those that are eager. Much of the time, a bigger deposit is required and there are more stringent terms and conditions to normal home loans.
There are various differences amongst lenders for discharged bankruptcy loan approvals. Some lenders will even offer reduced interest rates to those individuals whose finances are in good shape and who have good rental history, if relevant. The amount of time between your discharge and loan application will additionally influence the result of your application. Two years is generally advised. Additionally, maintaining a stable income and employment are likewise aspects which will be taken note of. Many bankrupt individuals will also actively try to strengthen their credit rating promptly to minimise the hardship of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Selecting an appropriate lender is essential, so it’s a good idea to choose a lender that not only grants loans to discharged bankrupts but one that is well-known and respectable. By doing this, you will feel comfortable that you’re receiving decent terms and conditions and your application is more likely to be approved. There are several dubious lenders on the market that exploit the financially vulnerable, so please take care. Another important variable to think about 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 all at once are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although 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 restoring 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 cannot get a loan until you are discharged. Almost all lenders will not approve any loans to those that are undischarged to prevent endangering any further financial hardship.
Increased rates and fees. Normally, interest rates and fees will be increased 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 pleasurable experience, but it doesn’t mean that you’ll never own a home again. Because of the complexity of bankruptcy, it’s imperative to seek professional advice from the experts to make sure you understand the process and therefore make wise financial decisions. To learn more or to speak with someone about your circumstances, contact Bankruptcy Experts Brisbane on 1300 795 575 or visit http://www.bankruptcyexpertsbrisbane.com.au