Although bankruptcy has many financial consequences, it certainly doesn’t signify the end of the world. Many people file for bankruptcy for plenty of reasons, and this number only intensifies with the difficult economic conditions that we experience today. According to information from the Australian Financial Security Authority (AFSA), there were 7,466 episodes of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is essential so you become aware of exactly what happens financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you’re currently in the process of bankruptcy and are not able to acquire any type of loan. Discharged bankruptcy means that you are no longer bankrupt, and can acquire a loan with different specialist lenders. Bankruptcy usually lasts for three years however can be lengthened in some scenarios.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it considerably challenging to get a home loan approved when you’re eventually discharged. Whether you will have the ability to purchase a home after bankruptcy rests on a number of factors, including the kind of loan you’re looking for and how you deal with your credit rating once declared bankrupt. What is certain is that your spending ability will be confined, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders granting home loans to clients that have been discharged from bankruptcy for only one day. Although a lot of these loans feature a higher interest rate and fees, they are still an option for people that are eager. In most cases, a larger deposit is needed and there are stricter terms and conditions when compared to standard home loans.
There are various differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply discounted rates to those people whose finances are in good condition and who have good rental history, if relevant. The length of time between your discharge and loan application will also affect the end result of your application. Two years is typically recommended. On top of that, sustaining a stable income and employment are also aspects which will be considered. Many bankrupt people will also actively try to improve their credit rating quickly to reduce the strain of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Choosing an appropriate lender is critical, so it’s a good idea to choose a lender that not only grants loans to discharged bankrupts but one that is well-known and trustworthy. By doing this, you will feel comfortable that you are getting decent terms and conditions and your application is more likely to be approved. There are several suspicious lenders on the market that exploit the financially vulnerable, so please be careful. Another significant factor to think about 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. Even though 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 demonstrates to the lenders that you are financially responsible.
Your credit rating will improve. Simple tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t get a loan until you are discharged. A lot of lenders will not approve any loans to those that are undischarged to prevent risking any additional financial hardship.
Increased rates and fees. In general, interest rates and fees will be higher 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it does not signify that you’ll never own a home again. As a result of the complexity of bankruptcy, it’s vital to seek professional advice from the experts to guarantee you understand the process and therefore make wise financial decisions. For more information or to talk with someone about your circumstances, contact Bankruptcy Experts Shellharbour on 1300 795 575 or visit http://www.bankruptcyexpertsshellharbour.com.au