Although bankruptcy has various financial consequences, it surely does not signify the end of the world. Many people file for bankruptcy for many reasons, and this figure only intensifies with the harsh economic conditions that we experience 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. Finding bankruptcy advice is critical 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 implies that you’re currently in the process of bankruptcy and are incapable to obtain any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can acquire a loan with several specialist lenders. Bankruptcy usually lasts for three years but can be extended in some situations.
Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it particularly challenging to get a home loan approved when you are eventually discharged. Whether you will be capable to buy a home after bankruptcy relies on a range of factors, such as the type of loan you’re looking for and how you handle your credit rating once declared bankrupt. What’s definite is that your spending power will be limited, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders providing home loans to customers that have been discharged from bankruptcy for as little as one day. While many of these loans feature a higher interest rate and fees, they are nonetheless an option for people that are serious. Much of the time, a larger deposit is required and there are more stringent terms and conditions to regular home loans.
There are numerous differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced interest rates to those whose finances are in good shape and who have good rental history, if applicable. The period of time between your discharge and loan application will also impact the outcome of your application. Two years is usually advised. In addition, sustaining a regular income and employment are also factors which will be taken into consideration. A lot of bankrupt people will also actively attempt to improve their credit rating immediately to minimise the hardship of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Choosing an appropriate lender is essential, so it’s a good idea to decide on a lender that not only offers loans to discharged bankrupts but one that is well-known and reputable. By doing this, you’ll feel comfortable that you’re receiving fair terms and conditions and your application is more likely to be approved. There are a few questionable lenders on the market that exploit the financially vulnerable, so please take care. Another valuable aspect to consider is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and numerous applications simultaneously are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Although it may be tough, it is still conceivable for discharged bankrupts to get a home loan approved.
The longer you’ve been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you are financially responsible.
Your credit rating will improve. Effortless tasks such as paying your bills on time and producing steady income will improve your credit rating.
You cannot acquire a loan until you are discharged. Most lenders will not approve any loans to people that are undischarged to avoid endangering any further financial hardship.
Increased rates and fees. Normally, interest rates and fees will be increased for discharged bankruptcy loans. You can only obtain 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 does not indicate that you’ll never own a home again. As a result of the complexity of bankruptcy, it’s critical to seek professional advice from the experts to make certain you understand the process and therefore make prudent financial decisions. To learn more or to talk to someone about your circumstances, contact Bankruptcy Experts Fremantle on 1300 795 575 or visit http://www.bankruptcyexpertsfremantle.com.au