Whilst bankruptcy has lots of financial impacts, it surely does not suggest the end of the world. Many people file for bankruptcy for numerous reasons, and this number only grows with the harsh economic conditions that we witness 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. Getting bankruptcy advice is essential so you become mindful of exactly what transpires financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you’re still in the process of bankruptcy and are not able to obtain any kind of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can obtain a loan with different specialist lenders. Bankruptcy usually lasts for three years but can be extended in some instances.
Unfortunately, the banks don’t provide the reasons for your bankruptcy and this can make it considerably challenging to get a home loan approved when you are eventually discharged. Whether you’ll be capable to buy a home after bankruptcy depends on a range of factors, for instance the type of loan you’re after and how you deal with your credit rating once declared bankrupt. What is definite is that your spending ability will be restricted, and repossession of property is common.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders offering home loans to borrowers that have been discharged from bankruptcy for as little as one day. Even though a lot 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 to standard home loans.
There are numerous differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted interest rates to those 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 additionally influence the outcome of your application. Two years is normally advised. In addition, maintaining a stable income and employment are also details which will be taken into account. A lot of bankrupt individuals will also proactively attempt to strengthen their credit rating quickly to minimise the hardship of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Choosing an appropriate lender is crucial, so it’s a smart idea to go with a lender that not only grants loans to discharged bankrupts but one that is widely known and reputable. By doing this, you’ll feel comfortable that you’re securing reasonable terms and conditions and your application is more likely to be approved. There are a few unreliable lenders on the market that take advantage of the financially vulnerable, so please take care. Another key aspect to take into account is that you should not apply to more than one lender at a time. Every loan application surfaces on your credit history, and several applications simultaneously are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be difficult, 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 are financially responsible.
Your credit rating will improve. Straightforward tasks like paying your bills on time and producing 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 jeopardizing any additional financial hardship.
Increased rates and fees. Usually, interest rates and fees will be higher for discharged bankruptcy loans. You can only get 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never an enjoyable experience, but it does not suggest 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 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 Cairns on 1300 795 575 or visit http://www.bankruptcyexpertscairns.com.au