Even though bankruptcy has plenty of financial consequences, it certainly doesn’t signify the end of the world. Many individuals file for bankruptcy for many reasons, and this number only increases with the difficult economic conditions that we experience today. According to statistics 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 essential 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 implies that you’re currently in the process of bankruptcy and are incapable to obtain any kind of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can obtain a loan with different specialist lenders. Bankruptcy typically 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 considerably difficult to get a home loan approved when you are ultimately discharged. Whether you will be able to buy a home after bankruptcy depends on various factors, for instance the type of loan you’re looking for and how you control your credit rating once declared bankrupt. What’s definite is that your spending ability will be limited, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a range of specialist lenders granting home loans to borrowers that have been discharged from bankruptcy for as little as one day. While a lot of these loans come with a higher interest rate and charges, they are nonetheless an option for individuals that are interested. Much of the time, a larger deposit is required and there are more stringent terms and conditions compared to regular home loans.
There are lots of differences between lenders for discharged bankruptcy loan approvals. A few lenders will even offer reduced rates to those individuals whose finances are in good condition and who have good rental history, if relevant. The period of time between your discharge and loan application will additionally influence the result of your application. Two years is typically advised. At the same time, sustaining a consistent income and employment are also details which will be considered. A lot of bankrupt individuals will also make an effort to attempt to bolster their credit rating quickly to reduce the burden of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Selecting 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 well-known and credible. By doing this, you will feel comfortable that you’re receiving decent terms and conditions and your application is more likely to be approved. There are several unreliable lenders on the market that take advantage of the financially vulnerable, so please beware. Another valuable 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 several applications simultaneously are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be challenging, 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 restoring your finances shows the lenders that you are financially responsible.
Your credit rating will improve. Practical tasks like paying your bills on time and generating steady income will improve your credit rating.
You cannot get a loan until you are discharged. Many lenders will not approve any loans to people that are undischarged to prevent 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 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 does not imply that you will never own a home again. As a result of the intricacy of bankruptcy, it’s crucial to seek professional advice from the experts to ensure you understand the process and therefore make sensible financial decisions. For more details or to talk with someone about your circumstances, contact Bankruptcy Experts Northern Rivers on 1300 795 575 or visit http://www.bankruptcyexpertsnorthernrivers.com.au