Even though bankruptcy has lots of financial impacts, it certainly doesn’t suggest the end of the world. Many individuals file for bankruptcy for numerous reasons, and this number only intensifies with the tough economic conditions that we observe today. According to statistics 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 vital so you become aware of exactly what happens financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you’re still in the process of bankruptcy and are unable to secure any kind of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can acquire a loan with different specialist lenders. Bankruptcy typically lasts for three years but can be extended in some scenarios.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it considerably difficult to get a home loan approved once you are ultimately discharged. Whether you’ll be able to buy a home after bankruptcy relies on several factors, such as the kind of loan you’re after and how you take care of your credit rating once declared bankrupt. What is clear is that your spending power will be reduced, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders offering home loans to borrowers that have been discharged from bankruptcy for only one day. Whilst the majority of these loans have a higher interest rate and charges, they are still an option for those that are serious. Much of the time, a bigger deposit is required and there are stricter terms and conditions in comparison to normal home loans.
There are numerous differences amongst 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 relevant. The amount of time between your discharge and loan application will also impact the outcome of your application. Two years is typically advised. Furthermore, sustaining a stable income and employment are likewise components which will be taken into consideration. Many bankrupt individuals will also make an effort to try to improve their credit rating immediately to decrease the strain of bankruptcy once discharged.
Points 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 well-known and trustworthy. By doing this, you’ll feel confident that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are a number of unreliable lenders on the market that take advantage of the financially vulnerable, so please be careful. Another useful variable to take into consideration is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and multiple applications all at once are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be tough, 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’re 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. Most lenders will not approve any loans to those that are undischarged to prevent risking any additional financial hardship.
Increased rates and fees. Normally, interest rates and fees will be higher for discharged bankruptcy loans. You can only receive 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 mean that you’ll never own a home again. Because of the complexity of bankruptcy, it’s critical to seek professional advice from the experts to guarantee you understand the process and therefore make prudent financial decisions. To find out more or to speak with someone about your circumstances, contact Bankruptcy Experts Wyong on 1300 795 575 or visit http://www.bankruptcyexpertswyong.com.au