What Happens When You Declare Bankruptcy and Purchasing A Home
While bankruptcy has many financial repercussions, it certainly does not signify the end of the world. Lots of individuals file for bankruptcy for plenty of reasons, and this number only grows with the challenging economic conditions that we encounter today. According to statistics from the Australian Financial Security Authority (AFSA), there were 7,466 cases of bankruptcy in Australia in the September 2014 quarter alone. Getting bankruptcy advice is critical 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 currently in the process of bankruptcy and are unable to acquire any type of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with various specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some circumstances.
Unfortunately, the banks don’t specify the reasons for your bankruptcy and this can make it particularly difficult to get a home loan approved once you’re ultimately discharged. Whether you will be capable to purchase a home after bankruptcy depends on various factors, like the type of loan you’re seeking and how you handle your credit rating once declared bankrupt. What is clear is that your spending capability will be constricted, and repossession of property is standard.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders providing home loans to customers that have been discharged from bankruptcy for only one day. Even though a lot of these loans come with a higher interest rate and charges, they are nevertheless an option for individuals that are serious. Most of the time, a bigger deposit is needed and there are more stringent terms and conditions compared to regular home loans.
There are plenty of differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced rates to those individuals whose finances are in good shape and who have excellent rental history, if relevant. The amount of time between your discharge and loan application will equally impact the result of your application. Two years is normally advised. Furthermore, sustaining a stable income and employment are likewise variables which will be taken into consideration. Many bankrupt individuals will also make an effort to try to improve their credit rating promptly to lower the burden of bankruptcy once discharged.
Factors to consider when applying for a home loan once discharged.
Deciding on a suitable lender is critical, so it’s a good idea to decide on a lender that not only grants loans to discharged bankrupts but one that is recognised 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 several untrustworthy lenders on the market that take advantage of the financially vulnerable, so please take care. Another significant aspect to take into consideration 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. Although it may be difficult, 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. Straightforward 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. Almost all lenders will not approve any loans to those that are undischarged to prevent jeopardizing any further financial distress.
Increased rates and fees. Usually, 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never a pleasurable experience, but it does not imply that you’ll never own a home again. Due to the complexity of bankruptcy, it’s crucial to seek professional advice from the experts to make sure you understand the process and therefore make wise financial decisions. To learn more or to talk to someone about your scenario, contact Bankruptcy Experts Geelong on 1300 795 575 or visit http://www.bankruptcyexpertsgeelong.com.au