Whilst bankruptcy has many financial consequences, it surely doesn’t represent the end of the world. Lots of people file for bankruptcy for plenty of reasons, and this number only intensifies with the challenging economic conditions that we witness today. According to reports 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 informed of exactly what transpires financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are still in the process of bankruptcy and are incapable to obtain any kind of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can acquire a loan with numerous specialist lenders. Bankruptcy ordinarily lasts for three years but can be lengthened in some circumstances.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved once you’re ultimately discharged. Whether you’ll have the capacity to purchase a home after bankruptcy rests on a range of factors, including the kind of loan you’re seeking and how you handle your credit rating once declared bankrupt. What’s certain is that your spending capability will be confined, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders supplying home loans to customers that have been discharged from bankruptcy for only one day. While most of these loans come with a higher interest rate and charges, they are still an option for people that are serious. In many cases, a bigger deposit is required and there are more stringent terms and conditions in comparison to regular home loans.
There are many differences amongst lenders for discharged bankruptcy loan approvals. A few lenders will even supply reduced rates to individuals whose finances are in good shape and who have excellent rental history, if applicable. The period of time between your discharge and loan application will equally impact the outcome of your application. Two years is generally recommended. On top of that, maintaining a stable income and employment are likewise variables which will be taken into consideration. Most bankrupt people will also actively attempt to bolster their credit rating promptly to reduce the hardship of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Deciding on a suitable lender is essential, so it’s a good idea to choose a lender that not only provides loans to discharged bankrupts but one that is recognised and trusted. By doing this, you’ll feel comfortable that you are securing reasonable 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 key factor to think about 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 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 conceivable for discharged bankrupts to get a home loan approved.
The longer you’ve 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 generating steady income will improve your credit rating.
You can’t get a loan until you are discharged. Almost all lenders will not approve any loans to individuals that are undischarged to avoid endangering any additional financial distress.
Increased rates and fees. Generally, interest rates and fees will be increased for discharged bankruptcy loans. You can only acquire 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 be on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it doesn’t indicate that you will never own a home again. Due to the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make sure you understand the process and therefore make sound financial decisions. For additional information or to talk with someone about your situation, contact Bankruptcy Experts Gold Coast on 1300 879 867 or visit http://www.bankruptcyexpertsgoldcoast.com.au