Although bankruptcy has many financial repercussions, it surely does not mean the end of the world. Many people file for bankruptcy for many reasons, and this figure only increases with the harsh economic conditions that we witness 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 necessary so you become aware of exactly what transpires financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you’re currently in the process of bankruptcy and are not able to secure any type of loan. Discharged bankruptcy means that you are no longer bankrupt, and can secure a loan with several specialist lenders. Bankruptcy normally lasts for three years but can be extended in some circumstances.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved once you are eventually discharged. Whether you’ll have the capacity to buy a home after bankruptcy relies on a number of factors, such as the kind of loan you’re looking for and how you control your credit rating once declared bankrupt. What is clear is that your spending power will be reduced, and repossession of property is common.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders granting home loans to borrowers that have been discharged from bankruptcy for as little as one day. Whilst the majority of these loans come with a higher interest rate and charges, they are nonetheless an option for those that are serious. In many cases, a bigger deposit is required and there are more stringent terms and conditions to standard home loans.
There are many differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted interest rates to individuals whose finances are in good condition and who have excellent rental history, if applicable. The period of time between your discharge and loan application will equally affect the result of your application. Two years is normally recommended. At the same time, sustaining a regular income and employment are also variables which will be taken note of. Many bankrupt people will also proactively attempt to increase their credit rating quickly to decrease the strain of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Picking out an appropriate lender is essential, so it’s a good idea to select a lender that not only offers loans to discharged bankrupts but one that is renowned and reputable. By doing this, you’ll feel comfortable that you’re securing fair terms and conditions and your application is more likely to be approved. There are some dubious lenders on the market that take advantage of the financially vulnerable, so please take care. Another useful factor to take into account 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 all at once are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be difficult, 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 demonstrates to the lenders that you are 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 can’t acquire a loan until you are discharged. Many lenders will not approve any loans to people that are undischarged to prevent risking any additional financial distress.
Increased rates and fees. Typically, interest rates and fees will be increased 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it does not indicate that you’ll 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. To learn more or to talk to someone about your circumstances, contact Bankruptcy Experts Cassowary Coast on 1300 795 575 or visit http://www.bankruptcyexpertscassowarycoast.com.au