April 20, 20170

What Happens When You Declare Bankruptcy and Purchasing A Home

Posted by:Charles Bosse onApril 20, 2017

Even though bankruptcy has many financial consequences, it certainly doesn’t suggest the end of the world. Lots of individuals file for bankruptcy for different reasons, and this amount only increases with the difficult economic conditions that we observe today. According to data 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 essential so you become aware of exactly what transpires financially when you declare bankruptcy.

There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy implies that you are still in the process of bankruptcy and are not able to obtain any type of loan. Discharged bankruptcy signifies that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some instances.

Sadly, the banks do not list the reasons for your bankruptcy and this can make it very difficult to get a home loan approved when you are ultimately discharged. Whether you’ll have the ability to buy a home after bankruptcy relies on a range of factors, for instance the type of loan you’re after and how you take care of your credit rating once declared bankrupt. What’s clear is that your spending ability will be constricted, and repossession of property is common.

Can you get a home loan approved after bankruptcy?

There are a variety of specialist lenders offering home loans to borrowers that have been discharged from bankruptcy for as little as one day. Though many of these loans feature a higher interest rate and fees, they are nevertheless an option for people that are serious. In most cases, a bigger deposit is required and there are stricter terms and conditions when compared to normal home loans.

There are many differences amongst lenders for discharged bankruptcy loan approvals. A few lenders will even offer reduced interest rates to those people whose finances are in good shape and who have good rental history, if applicable. The amount of time between your discharge and loan application will also affect the end result of your application. Two years is generally recommended. Equally, sustaining a stable income and employment are likewise variables which will be considered. Many bankrupt people will also proactively attempt to strengthen their credit rating quickly to lower the strain of bankruptcy once discharged.

Things to consider when applying for a home loan once discharged.

Selecting an appropriate lender is very important, so it’s a smart idea to decide on a lender that not only provides loans to discharged bankrupts but one that is prominent and trustworthy. 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 several suspicious lenders on the market that exploit the financially vulnerable, so please beware. Another important 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 multiple applications at the same time are viewed negatively by lenders.

Pros and cons of home loans for discharged bankrupts

Pros

You can still a loan. Though it may be tough, it is still conceivable for discharged bankrupts to get a home loan approved.

The longer you have been discharged, the easier it gets. Spending time rebuilding your finances shows the lenders that you are financially responsible.

Your credit rating will improve. Simple tasks such as paying your bills on time and generating steady income will improve your credit rating.

Cons

You cannot get a loan until you are discharged. Most lenders will not approve any loans to individuals that are undischarged to prevent risking any further financial hardship.

Increased rates and fees. Typically, interest rates and fees will be higher 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 pleasurable experience, but it doesn’t signify that you’ll never own a home again. Due to the complexity of bankruptcy, it’s essential to seek professional advice from the experts to ensure you understand the process and therefore make prudent financial decisions. For additional information or to speak to someone about your situation, contact Fresh Start Solutions Adelaide on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-adelaide

 

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