Although bankruptcy has various financial consequences, it certainly does not represent the end of the world. Lots of people file for bankruptcy for different reasons, and this number only grows 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. Finding bankruptcy advice is critical so you become informed of exactly what happens financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are still 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 obtain a loan with various specialist lenders. Bankruptcy normally lasts for three years however can be extended in some circumstances.
Unfortunately, the banks do not specify the reasons for your bankruptcy and this can make it really challenging to get a home loan approved when you are eventually discharged. Whether you will be able to purchase a home after bankruptcy hinges on several factors, like the kind of loan you’re seeking and how you deal with your credit rating once declared bankrupt. What’s certain is that your spending capability will be confined, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders providing home loans to customers that have been discharged from bankruptcy for only one day. Even though a lot of these loans come with a higher interest rate and charges, they are nevertheless an option for individuals that are serious. Most of the time, a larger deposit is required and there are more stringent terms and conditions compared to normal home loans.
There are many differences among lenders for discharged bankruptcy loan approvals. Some lenders will even supply reduced rates to individuals whose finances are in good condition and who have good rental history, if relevant. The amount of time between your discharge and loan application will similarly affect the end result of your application. Two years is commonly advised. In addition, sustaining a steady income and employment are also variables which will be taken into consideration. A lot of bankrupt individuals will also make an effort to attempt to increase their credit rating immediately to minimise the strain of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Choosing a suitable lender is critical, so it’s a good idea to go with a lender that not only offers loans to discharged bankrupts but one that is renowned and trusted. By doing this, you’ll feel confident that you’re getting reasonable terms and conditions and your application is more likely to be approved. There are some questionable lenders on the market that take advantage of the financially vulnerable, so please beware. Another useful factor to take into account is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and numerous applications simultaneously 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 possible 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 are financially responsible.
Your credit rating will improve. Basic tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t obtain a loan until you are discharged. Almost all lenders will not approve any loans to people that are undischarged to prevent risking any additional financial distress.
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 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 will never own a home again. Due to the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to ensure you understand the process and therefore make wise financial decisions. For more information or to talk with someone about your circumstances, contact Bankruptcy Experts Rockhampton on 1300 795 575 or visit http://www.bankruptcyexpertsrockhampton.com.au