What Happens When You Declare Bankruptcy and Buying A Home
While bankruptcy has plenty of financial consequences, it certainly doesn’t represent the end of the world. Many folks file for bankruptcy for numerous reasons, and this figure only increases with the difficult 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. Finding bankruptcy advice is necessary so you become aware of exactly what happens financially when you declare bankruptcy.
There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are currently in the process of bankruptcy and are incapable to secure any type of loan. Discharged bankruptcy means that you are no longer bankrupt, and can acquire a loan with numerous specialist lenders. Bankruptcy typically lasts for three years but can be lengthened in some instances.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it considerably difficult to get a home loan approved once you’re ultimately discharged. Whether you’ll have the ability to purchase a home after bankruptcy depends on a number of factors, such as the type of loan you’re looking for and how you take care of your credit rating once declared bankrupt. What is definite is that your spending ability will be reduced, and repossession of property is standard.
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 fees, they are nevertheless an option for those that are serious. Much of the time, a larger deposit is needed and there are stricter terms and conditions compared to normal home loans.
There are numerous differences among lenders for discharged bankruptcy loan approvals. Some lenders will even provide reduced rates to those people whose finances are in good shape and who have excellent rental history, if relevant. The period of time between your discharge and loan application will equally impact the outcome of your application. Two years is normally recommended. At the same time, maintaining a stable income and employment are likewise matters which will be taken note of. Many bankrupt individuals will also proactively try to improve their credit rating promptly to decrease the difficulty of bankruptcy once discharged.
Things to consider when applying for a home loan once discharged.
Selecting an appropriate lender is essential, so it’s a good idea to go with a lender that not only provides loans to discharged bankrupts but one that is well-known and respectable. By doing this, you’ll feel comfortable that you are getting fair terms and conditions and your application is more likely to be approved. There are several dubious lenders on the market that take advantage of the financially vulnerable, so please beware. Another valuable aspect to consider is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and several applications at the same time are seen negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Even though it may be challenging, 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 shows the lenders that you’re 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 can’t get a loan until you are discharged. A large number of lenders will not approve any loans to people that are undischarged to avoid jeopardizing 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 bigger 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 imply that you’ll never own a home again. Because of the intricacy of bankruptcy, it’s vital to seek professional advice from the experts to make certain you understand the process and therefore make prudent financial decisions. For more information or to talk with someone about your situation, contact Bankruptcy Experts Tamworth on 1300 795 575 or visit http://www.bankruptcyexpertstamworth.com.au