Even though bankruptcy has many financial consequences, it certainly does not represent the end of the world. Lots of individuals file for bankruptcy for plenty of reasons, and this amount only intensifies with the harsh economic conditions that we encounter today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Seeking bankruptcy advice is crucial so you become informed of exactly what happens financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you are currently in the process of bankruptcy and are unable to secure any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can secure a loan with various specialist lenders. Bankruptcy usually lasts for three years but can be lengthened in some scenarios.
Unfortunately, the banks don’t list the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved when you are ultimately discharged. Whether you will be capable to purchase a home after bankruptcy relies on various factors, such as the kind of loan you’re looking for and how you take care of your credit rating once declared bankrupt. What is definite is that your spending ability will be reduced, 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 clients that have been discharged from bankruptcy for as little as one day. Whilst the majority of these loans feature a higher interest rate and fees, they are nevertheless an option for individuals that are eager. In most cases, a larger deposit is needed and there are more stringent terms and conditions to standard home loans.
There are lots of differences between lenders for discharged bankruptcy loan approvals. A few lenders will even supply reduced interest rates to individuals whose finances are in good shape and who have good rental history, if applicable. The amount of time between your discharge and loan application will also affect the result of your application. Two years is typically advised. In addition, sustaining a stable income and employment are likewise aspects which will be taken note of. Many bankrupt individuals will also proactively attempt to increase their credit rating promptly to decrease the strain of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Selecting a suitable lender is key, so it’s a smart idea to go with a lender that not only provides loans to discharged bankrupts but one that is prominent and trustworthy. By doing this, you will feel comfortable that you are getting fair terms and conditions and your application is more likely to be approved. There are a few suspicious lenders on the market that exploit the financially vulnerable, so please take care. Another important factor to take into consideration is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and multiple applications simultaneously are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be difficult, 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 rebuilding your finances shows the lenders that you are financially responsible.
Your credit rating will improve. Basic tasks such as 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 those that are undischarged to avoid risking any additional financial hardship.
Increased rates and fees. In general, interest rates and fees will be higher for discharged bankruptcy loans. You can only receive 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 an enjoyable experience, but it doesn’t signify that you’ll never own a home again. Due to the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make certain you understand the process and therefore make sensible financial decisions. To learn more or to talk to someone about your circumstances, contact Bankruptcy Experts Parramatta on 1300 795 575 or visit http://www.bankruptcyexpertsparramatta.com.au