Whilst bankruptcy has various financial impacts, it certainly doesn’t mean the end of the world. Many people file for bankruptcy for numerous reasons, and this amount only increases with the difficult economic conditions that we encounter today. According to data from the Australian Financial Security Authority (AFSA), there were 7,466 cases of bankruptcy in Australia in the September 2014 quarter alone. Getting 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 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 but can be lengthened in some scenarios.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it really challenging to get a home loan approved once you are ultimately discharged. Whether you’ll be capable to purchase a home after bankruptcy hinges on various factors, like the type of loan you’re looking for and how you manage your credit rating once declared bankrupt. What is certain is that your spending capability will be restricted, 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. Even though the majority of these loans have a higher interest rate and charges, they are nevertheless an option for people that are eager. Most of the time, a bigger deposit is needed and there are more stringent terms and conditions to regular home loans.
There are various differences between 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 relevant. The amount of time between your discharge and loan application will additionally affect the result of your application. Two years is usually advised. Furthermore, sustaining a stable income and employment are also components which will be taken into account. Many bankrupt individuals will also make an effort to try to improve their credit rating promptly to lower the difficulty of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Selecting an appropriate lender is very important, so it’s a good idea to decide on a lender that not only grants loans to discharged bankrupts but one that is prominent and reputable. By doing this, you will feel confident that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are a few questionable lenders on the market that exploit the financially vulnerable, so please beware. Another valuable variable to consider is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and several 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 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. Simple tasks like paying your bills on time and producing steady income will improve your credit rating.
You cannot receive a loan until you are discharged. Many lenders will not approve any loans to individuals that are undischarged to prevent endangering any further financial hardship.
Increased rates and fees. Generally, interest rates and fees will be increased 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasant experience, but it does not suggest that you’ll never own a home again. Because of the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make sure you understand the process and therefore make prudent financial decisions. For additional information or to speak with someone about your situation, contact Bankruptcy Experts Townsville on 1300 795 575 or visit http://www.bankruptcyexpertstownsville.com.au