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- April 24, 2017
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Although bankruptcy has plenty of financial repercussions, it surely doesn’t signify the end of the world. Many people file for bankruptcy for plenty of reasons, and this number only increases with the challenging economic conditions that we encounter today. According to statistics 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 informed of exactly what transpires financially when you declare bankruptcy.
There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you are currently in the process of bankruptcy and are incapable to secure any type of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can secure a loan with different specialist lenders. Bankruptcy typically lasts for three years however can be lengthened in some circumstances.
Sadly, the banks don’t list the reasons for your bankruptcy and this can make it quite challenging to get a home loan approved once you are eventually discharged. Whether you’ll have the capacity to buy a home after bankruptcy relies on a number of factors, such as the kind of loan you’re after and how you manage your credit rating once declared bankrupt. What’s certain is that your spending power will be constricted, and repossession of property is common.
Can you get a home loan approved after bankruptcy?
There are a number of specialist lenders offering home loans to clients that have been discharged from bankruptcy for as little as one day. Although most of these loans have a higher interest rate and fees, they are still an option for individuals that are eager. In many cases, a larger deposit is needed and there are more stringent terms and conditions to standard home loans.
There are various differences between lenders for discharged bankruptcy loan approvals. A couple of lenders will even provide discounted rates to those people whose finances are in good condition and who have good rental history, if applicable. The length of time between your discharge and loan application will also affect the outcome of your application. Two years is typically recommended. Equally, sustaining a stable income and employment are also details which will be taken into account. Many bankrupt people will also make an effort to attempt to improve their credit rating promptly to decrease the difficulty of bankruptcy once discharged.
Points to consider when applying for a home loan once discharged.
Deciding on an appropriate lender is crucial, so it’s a smart idea to choose a lender that not only grants loans to discharged bankrupts but one that is prominent and credible. 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 a number of suspicious lenders on the market that exploit the financially vulnerable, so please take care. Another key factor to consider is that you should not apply to more than one lender simultaneously. Every loan application appears on your credit history, and several applications at the same time are viewed negatively by lenders.
Pros and cons of home loans for discharged bankrupts
You can still a loan. Despite the fact that it may be challenging, 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 restoring your finances demonstrates to the lenders that you are financially responsible.
Your credit rating will improve. Basic tasks like paying your bills on time and generating steady income will improve your credit rating.
You can’t acquire a loan until you are discharged. The majority of lenders will not approve any loans to those that are undischarged to prevent risking any additional financial distress.
Increased rates and fees. In general, interest rates and fees will be increased for discharged bankruptcy loans. You can only get 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 appear on the National Personal Insolvency Index (NPII).
Bankruptcy is never an enjoyable experience, but it does not signify that you will never own a home again. Due to the intricacy of bankruptcy, it’s imperative to seek professional advice from the experts to make sure you understand the process and therefore make sound financial decisions. For more information or to speak to someone about your circumstances, contact Bankruptcy Experts Gladstone on 1300 795 575 or visit http://www.bankruptcyexpertsgladstone.com.au