Although bankruptcy has plenty of financial repercussions, it certainly does not suggest the end of the world. Lots of individuals file for bankruptcy for numerous reasons, and this figure only intensifies with the tough economic conditions that we experience 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. Finding bankruptcy advice is crucial so you become informed of exactly what transpires financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy signifies that you’re currently 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 obtain a loan with various specialist lenders. Bankruptcy generally lasts for three years but can be extended in some scenarios.
Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it considerably challenging to get a home loan approved when you’re ultimately discharged. Whether you will have the ability to buy a home after bankruptcy hinges on a number of factors, for instance the type of loan you’re looking for and how you deal with your credit rating once declared bankrupt. What’s certain is that your spending ability will be constricted, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders offering home loans to borrowers that have been discharged from bankruptcy for only one day. Although many of these loans have a higher interest rate and charges, they are still an option for people that are serious. Most of the time, a larger deposit is needed and there are more stringent terms and conditions to normal home loans.
There are numerous differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply discounted interest rates to those people whose finances are in good condition and who have good rental history, if applicable. The amount of time between your discharge and loan application will additionally affect the result of your application. Two years is commonly recommended. On top of that, sustaining a consistent income and employment are also factors which will be considered. Many bankrupt people will also actively try to improve their credit rating quickly 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 offers loans to discharged bankrupts but one that is renowned and trusted. By doing this, you will feel comfortable that you’re getting fair terms and conditions and your application is more likely to be approved. There are several dubious lenders on the market that take advantage of the financially vulnerable, so please be careful. Another important factor to take into consideration is that you should not apply to more than one lender at a time. Every loan application surfaces on your credit history, and multiple applications all at once are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be complicated, it is still conceivable 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 are financially responsible.
Your credit rating will improve. Simple tasks such as paying your bills on time and producing steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Many lenders will not approve any loans to those that are undischarged to avoid risking any further financial hardship.
Increased rates and fees. Generally, 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 be on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasant experience, but it does not mean that you will never own a home again. As a result of the complexity of bankruptcy, it’s critical to seek professional advice from the experts to make sure you understand the process and therefore make prudent financial decisions. For more details or to talk with someone about your situation, contact Bankruptcy Experts Newcastle on 1300 795 575 or visit http://www.bankruptcyexpertsnewcastle.com.au