April 20, 20170

What Happens When You Declare Bankruptcy and Buying A Home

Posted by:Charles Bosse onApril 20, 2017

Whilst bankruptcy has many financial consequences, it surely doesn’t mean the end of the world. Lots of people file for bankruptcy for different reasons, and this amount only escalates with the difficult economic conditions that we experience today. According to data from the Australian Financial Security Authority (AFSA), there were 7,466 incidents of bankruptcy in Australia in the September 2014 quarter alone. Seeking bankruptcy advice is crucial so you become aware of exactly what happens financially when you declare bankruptcy.

 

There are two categories 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 kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can acquire a loan with various specialist lenders. Bankruptcy typically lasts for three years however can be lengthened in some situations.

 

Unfortunately, the banks do not provide the reasons for your bankruptcy and this can make it quite difficult to get a home loan approved when you’re eventually discharged. Whether you’ll be capable to buy a home after bankruptcy relies on a range of factors, like the kind of loan you’re after and how you deal with your credit rating once declared bankrupt. What is clear is that your spending capability will be reduced, and repossession of property is common.

 

Can you get a home loan approved after bankruptcy?

 

There are a range of specialist lenders providing home loans to borrowers that have been discharged from bankruptcy for only one day. Whilst a lot of these loans feature a higher interest rate and charges, they are still an option for individuals that are eager. Most of the time, a bigger deposit is required and there are stricter terms and conditions in comparison to standard home loans.

 

There are lots of differences among lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced rates to those individuals whose finances are in good condition and who have excellent rental history, if applicable. The period of time between your discharge and loan application will likewise affect the result of your application. Two years is normally advised. Equally, sustaining a steady income and employment are likewise variables which will be taken note of. A lot of bankrupt individuals will also actively try to improve their credit rating quickly to decrease the strain of bankruptcy once discharged.

 

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

 

Selecting a suitable lender is critical, so it’s a smart idea to go with a lender that not only grants loans to discharged bankrupts but one that is renowned and credible. By doing this, you will feel confident that you’re securing fair terms and conditions and your application is more likely to be approved. There are a number of dubious lenders on the market that exploit the financially vulnerable, so please take care. Another key variable 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 all at once are seen negatively by lenders.

 

Pros and cons of home loans for discharged bankrupts

 

Pros

You can still a loan. Although it may be complicated, it is still attainable for discharged bankrupts to get a home loan approved.

The longer you’ve been discharged, the easier it gets. Spending time restoring your finances shows the lenders that you’re 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 can’t acquire a loan until you are discharged. A large number of lenders will not approve any loans to individuals that are undischarged to avoid endangering any further financial hardship.

Increased rates and fees. Usually, interest rates and fees will be higher 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 appear on the National Personal Insolvency Index (NPII).

 

Bankruptcy is never an enjoyable experience, but it doesn’t mean that you will never own a home again. Due to the complexity of bankruptcy, it’s vital to seek professional advice from the experts to make certain you understand the process and therefore make wise financial decisions. To learn more or to talk to someone about your situation, contact Fresh Start Solutions Gold Coast on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-goldcoast

 

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