Although bankruptcy has many financial consequences, it surely does not represent the end of the world. Lots of individuals file for bankruptcy for numerous reasons, and this figure only increases with the harsh economic conditions that we see 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. Finding bankruptcy advice is vital 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 indicates that you are currently in the process of bankruptcy and are incapable to acquire any kind of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can secure a loan with different specialist lenders. Bankruptcy ordinarily lasts for three years however can be lengthened in some circumstances.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it very difficult to get a home loan approved once you’re ultimately discharged. Whether you’ll have the ability to purchase a home after bankruptcy relies on a number of factors, such as the kind of loan you’re looking for and how you deal with your credit rating once declared bankrupt. What is certain is that your spending capacity will be restricted, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders offering home loans to customers that have been discharged from bankruptcy for only one day. Even though a lot of these loans feature a higher interest rate and fees, they are nonetheless an option for individuals that are interested. In many cases, a bigger deposit is needed and there are stricter terms and conditions compared to normal home loans.
There are plenty of differences among lenders for discharged bankruptcy loan approvals. A few lenders will even provide reduced interest rates to individuals whose finances are in good shape and who have good rental history, if applicable. The length of time between your discharge and loan application will similarly impact the outcome of your application. Two years is typically advised. Equally, sustaining a stable income and employment are also aspects which will be taken note of. A lot of bankrupt individuals will also make an effort to try to bolster their credit rating quickly to decrease the burden of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Choosing an appropriate lender is critical, so it’s a good idea to select a lender that not only offers loans to discharged bankrupts but one that is recognised and credible. By doing this, you’ll feel confident that you are getting decent terms and conditions and your application is more likely to be approved. There are some untrustworthy lenders on the market that exploit the financially vulnerable, so please be careful. Another significant variable to think about is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and several 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 feasible for discharged bankrupts to get a home loan approved.
The longer you’ve been discharged, the easier it gets. Spending time restoring 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 cannot obtain a loan until you are discharged. Almost all lenders will not approve any loans to those that are undischarged to prevent risking any further financial hardship.
Increased rates and fees. Usually, interest rates and fees will be higher for discharged bankruptcy loans. You can only acquire 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 pleasant experience, but it doesn’t signify that you will never own a home again. Due to the complexity of bankruptcy, it’s essential to seek professional advice from the experts to make sure you understand the process and therefore make prudent financial decisions. For additional information or to speak to someone about your circumstances, contact Bankruptcy Experts Lismore on 1300 795 575 or visit http://www.bankruptcyexpertslismore.com.au