While bankruptcy has various financial impacts, it certainly does not signify the end of the world. Many people file for bankruptcy for a number of reasons, and this amount only grows with the challenging economic conditions that we observe today. According to information 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 essential so you become informed of exactly what transpires financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you are currently in the process of bankruptcy and are unable to acquire any type of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can acquire a loan with several specialist lenders. Bankruptcy ordinarily lasts for three years however can be extended in some scenarios.
Unfortunately, the banks don’t provide the reasons for your bankruptcy and this can make it very challenging to get a home loan approved when you’re eventually discharged. Whether you’ll have the capacity to purchase a home after bankruptcy depends on a range of factors, such as the type of loan you’re seeking and how you control your credit rating once declared bankrupt. What is certain is that your spending capability will be reduced, and repossession of property is typical.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders granting home loans to customers that have been discharged from bankruptcy for as little as one day. Whilst most of these loans come with a higher interest rate and charges, they are nevertheless an option for those that are interested. In many cases, a larger deposit is required and there are more stringent terms and conditions to normal home loans.
There are numerous differences between lenders for discharged bankruptcy loan approvals. A few lenders will even provide discounted rates to individuals whose finances are in good condition and who have good rental history, if applicable. The length of time between your discharge and loan application will similarly affect the result of your application. Two years is commonly advised. At the same time, sustaining a consistent income and employment are also matters which will be taken into account. A lot of bankrupt people will also proactively try to strengthen their credit rating quickly to reduce the strain of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Deciding on an appropriate lender is key, so it’s a smart idea to go with a lender that not only provides loans to discharged bankrupts but one that is widely known and credible. By doing this, you will feel comfortable that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are some suspicious lenders on the market that take advantage of the financially vulnerable, so please take care. Another significant variable to take into account is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and numerous applications all at once are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be challenging, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you have been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you’re financially responsible.
Your credit rating will improve. Effortless tasks like paying your bills on time and producing steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Many lenders will not approve any loans to people that are undischarged to avoid endangering any further financial distress.
Increased rates and fees. Generally, interest rates and fees will be higher for discharged bankruptcy loans. You can only get 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 an enjoyable experience, but it doesn’t mean that you’ll never own a home again. Because of the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make sure you understand the process and therefore make sensible financial decisions. To find out more or to talk with someone about your scenario, contact Bankruptcy Experts Tennant Creek on 1300 795 575 or visit http://www.bankruptcyexpertstennantcreek.com.au