Even though bankruptcy has lots of financial consequences, it certainly does not represent the end of the world. Many people file for bankruptcy for different reasons, and this figure only escalates with the challenging economic conditions that we encounter 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 mindful of exactly what happens financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy signifies that you are still in the process of bankruptcy and are not able to acquire any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy generally lasts for three years however can be extended in some instances.
Unfortunately, the banks don’t provide the reasons for your bankruptcy and this can make it particularly challenging to get a home loan approved when you are eventually discharged. Whether you’ll have the ability to purchase a home after bankruptcy rests on a range of factors, such as the kind of loan you’re looking for and how you manage your credit rating once declared bankrupt. What’s certain is that your spending ability will be restricted, 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 borrowers that have been discharged from bankruptcy for as little as one day. While many of these loans come with a higher interest rate and fees, they are nevertheless an option for those that are serious. In many cases, a larger deposit is needed and there are stricter terms and conditions in comparison to standard home loans.
There are many differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply discounted interest rates to 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 also affect the result of your application. Two years is commonly advised. At the same time, maintaining a consistent income and employment are likewise factors which will be taken note of. Many bankrupt individuals will also proactively attempt to strengthen their credit rating promptly to lower the burden of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Selecting an appropriate lender is important, so it’s a smart 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 getting fair 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 be careful. Another significant factor to take into account 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. Though it may be difficult, it is still possible 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. Practical tasks like paying your bills on time and producing steady income will improve your credit rating.
You can’t obtain a loan until you are discharged. Most lenders will not approve any loans to people that are undischarged to avoid risking 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 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 indicate that you will never own a home again. As a result of the intricacy of bankruptcy, it’s vital to seek professional advice from the experts to guarantee you understand the process and therefore make wise financial decisions. To find out more or to talk with someone about your situation, contact Gold Coast Bankruptcy Centre on 1300 795 575 or visit http://www.goldcoastbankruptcycentre.com.au