Although bankruptcy has many financial impacts, it surely does not suggest the end of the world. Lots of people file for bankruptcy for plenty of reasons, and this number only increases 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 informed of exactly what happens financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you’re still in the process of bankruptcy and are unable to acquire any type of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can obtain a loan with different specialist lenders. Bankruptcy generally lasts for three years but can be lengthened in some instances.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it quite difficult to get a home loan approved when you’re eventually discharged. Whether you will be able to buy a home after bankruptcy rests on a number of factors, like the type of loan you’re after and how you take care of your credit rating once declared bankrupt. What is clear is that your spending capacity will be restricted, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders supplying home loans to borrowers that have been discharged from bankruptcy for as little as one day. Though many of these loans feature a higher interest rate and charges, they are nonetheless an option for people that are interested. In many cases, a larger deposit is required and there are stricter terms and conditions compared to regular home loans.
There are various differences among lenders for discharged bankruptcy loan approvals. A few lenders will even offer reduced rates to those individuals whose finances are in good shape and who have excellent rental history, if relevant. The period of time between your discharge and loan application will also influence the outcome of your application. Two years is usually advised. Additionally, sustaining a stable income and employment are likewise components which will be taken note of. Many bankrupt people will also actively attempt to increase their credit rating immediately to lower the strain of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Picking out a suitable lender is very important, so it’s a good idea to choose a lender that not only grants loans to discharged bankrupts but one that is recognised and reputable. By doing this, you’ll feel comfortable that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are several dubious lenders on the market that take advantage of the financially vulnerable, so please take care. Another useful factor to take into consideration is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and multiple applications at the same time are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be complicated, 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 demonstrates to the lenders that you’re 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 get a loan until you are discharged. The majority of lenders will not approve any loans to people that are undischarged to avoid risking any additional financial distress.
Increased rates and fees. Normally, 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 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. Due to the complexity of bankruptcy, it’s critical to seek professional advice from the experts to guarantee you understand the process and therefore make sensible financial decisions. To find out more or to talk to someone about your circumstances, contact Bankruptcy Experts Geraldton on 1300 795 575 or visit http://www.bankruptcyexpertsgeraldton.com.au