April 20, 20170

What Happens When You Declare Bankruptcy and Buying A Home

Posted by:Charles Bosse onApril 20, 2017

Whilst bankruptcy has various financial repercussions, it surely does not suggest the end of the world. Lots of folks file for bankruptcy for numerous reasons, and this figure only grows with the challenging economic conditions that we encounter today. According to reports from the Australian Financial Security Authority (AFSA), there were 7,466 cases of bankruptcy in Australia in the September 2014 quarter alone. Seeking bankruptcy advice is vital so you become mindful 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 currently in the process of bankruptcy and are not able to secure any kind of loan. Discharged bankruptcy means that you are no longer bankrupt, and can obtain a loan with various specialist lenders. Bankruptcy generally lasts for three years however can be extended in some scenarios.

 

Sadly, the banks do not provide the reasons for your bankruptcy and this can make it really challenging to get a home loan approved once you are ultimately discharged. Whether you will be able to purchase a home after bankruptcy hinges on a range of factors, such as the kind of loan you’re after and how you handle your credit rating once declared bankrupt. What’s clear is that your spending capability will be limited, and repossession of property is common.

 

Can you get a home loan approved after bankruptcy?

 

There are a variety of specialist lenders granting home loans to borrowers that have been discharged from bankruptcy for as little as one day. Though many of these loans come with a higher interest rate and charges, they are nonetheless an option for individuals that are serious. In most cases, a larger deposit is required and there are stricter terms and conditions when compared to standard home loans.

 

There are numerous differences amongst lenders for discharged bankruptcy loan approvals. A couple of lenders will even supply reduced interest rates to those individuals 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 additionally affect the result of your application. Two years is normally recommended. At the same time, maintaining a regular income and employment are likewise factors which will be taken note of. Most bankrupt people will also make an effort to try to bolster their credit rating quickly to reduce the difficulty of bankruptcy once discharged.

 

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

 

Picking out a suitable lender is critical, so it’s a smart idea to choose a lender that not only provides loans to discharged bankrupts but one that is widely known and trustworthy. By doing this, you will feel confident that you’re getting decent 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 be careful. Another valuable variable to take into account is that you should not apply to more than one lender simultaneously. Every loan application surfaces on your credit history, and numerous applications simultaneously are seen negatively by lenders.

 

Pros and cons of home loans for discharged bankrupts

 

Pros

You can still a loan. Even though it may be difficult, 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. Effortless tasks such as paying your bills on time and generating steady income will improve your credit rating.

 

Cons

You can’t get a loan until you are discharged. Many lenders will not approve any loans to individuals that are undischarged to prevent endangering any additional financial hardship.

Increased rates and fees. Typically, interest rates and fees will be higher 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 an enjoyable experience, but it does not indicate that you will never own a home again. Because of the intricacy of bankruptcy, it’s crucial to seek professional advice from the experts to ensure you understand the process and therefore make wise financial decisions. For more information or to talk to someone about your situation, contact Fresh Start Solutions Hobart on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-hobart

 

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