Even though bankruptcy has a lot of financial consequences, it surely doesn’t mean the end of the world. Many people file for bankruptcy for plenty of reasons, and this amount only escalates with the challenging economic conditions that we witness 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. Seeking bankruptcy advice is crucial so you become aware of exactly what transpires financially when you declare bankruptcy.
There are two categories of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy indicates that you’re still in the process of bankruptcy and are incapable to secure any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with several specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some situations.
Sadly, the banks don’t provide the reasons for your bankruptcy and this can make it particularly difficult to get a home loan approved when you’re eventually discharged. Whether you’ll be capable to purchase a home after bankruptcy depends on a range of factors, such as the kind of loan you’re after and how you control your credit rating once declared bankrupt. What’s definite is that your spending capability will be reduced, and repossession of property is normal.
Can you get a home loan approved after bankruptcy?
There are a variety of specialist lenders supplying home loans to clients that have been discharged from bankruptcy for as little as one day. Although many of these loans feature a higher interest rate and charges, they are still an option for those that are serious. Most of the time, a larger deposit is needed and there are stricter terms and conditions to standard home loans.
There are lots of differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even offer discounted interest rates to those people whose finances are in good shape and who have excellent rental history, if applicable. The period of time between your discharge and loan application will likewise affect the outcome of your application. Two years is commonly advised. Furthermore, sustaining a regular income and employment are likewise aspects which will be considered. Most bankrupt people will also proactively attempt to increase their credit rating quickly to minimise the burden of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Deciding on an appropriate lender is very important, so it’s a smart idea to go with a lender that not only provides loans to discharged bankrupts but one that is recognised and respectable. By doing this, you’ll feel confident that you are receiving reasonable terms and conditions and your application is more likely to be approved. There are some untrustworthy lenders on the market that take advantage of the financially vulnerable, so please be careful. Another significant factor to consider is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and multiple applications at the same time are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be complicated, it is still possible 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. Practical tasks such as paying your bills on time and producing steady income will improve your credit rating.
You cannot obtain a loan until you are discharged. A large number of lenders will not approve any loans to individuals that are undischarged to prevent risking any additional financial hardship.
Increased rates and fees. Normally, interest rates and fees will be increased for discharged bankruptcy loans. You can only acquire 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 pleasant experience, but it doesn’t mean that you will never own a home again. Due to the complexity of bankruptcy, it’s critical to seek professional advice from the experts to guarantee you understand the process and therefore make sensible financial decisions. To find out more or to talk to someone about your situation, contact Bankruptcy Experts Emerald on 1300 795 575 or visit http://www.bankruptcyexpertsemerald.com.au