April 20, 20170

What Happens When You Declare Bankruptcy and Buying A Home

Posted by:Charles Bosse onApril 20, 2017

Whilst bankruptcy has plenty of financial impacts, it certainly does not represent the end of the world. Many people file for bankruptcy for plenty of reasons, and this amount only escalates with the tough economic conditions that we witness today. According to reports 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 imperative so you become informed of exactly what transpires financially when you declare bankruptcy.

 

There are two kinds of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy means that you’re still in the process of bankruptcy and are unable to secure any kind of loan. Discharged bankruptcy implies that you are no longer bankrupt, and can secure a loan with various specialist lenders. Bankruptcy ordinarily lasts for three years but can be extended in some scenarios.

 

Sadly, the banks don’t provide the reasons for your bankruptcy and this can make it considerably challenging to get a home loan approved when you’re ultimately discharged. Whether you’ll have the ability to buy a home after bankruptcy rests on several factors, for instance the kind of loan you’re seeking and how you control your credit rating once declared bankrupt. What’s certain 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 number of specialist lenders supplying home loans to customers that have been discharged from bankruptcy for as little as one day. Though the majority of these loans feature a higher interest rate and charges, they are still an option for those that are interested. Much of the time, a larger deposit is required and there are more stringent terms and conditions to regular home loans.

 

There are many differences among lenders for discharged bankruptcy loan approvals. A few lenders will even provide reduced rates to those individuals whose finances are in good condition and who have good rental history, if relevant. The amount of time between your discharge and loan application will additionally influence the end result of your application. Two years is commonly advised. Furthermore, maintaining a stable income and employment are likewise details which will be taken into account. A lot of bankrupt people will also proactively attempt to bolster their credit rating immediately to reduce the burden of bankruptcy once discharged.

 

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

 

Deciding on an appropriate lender is crucial, so it’s a smart idea to decide on a lender that not only grants loans to discharged bankrupts but one that is widely known and respectable. By doing this, you’ll feel comfortable that you’re receiving reasonable terms and conditions and your application is more likely to be approved. There are a number of untrustworthy lenders on the market that take advantage of the financially vulnerable, so please be careful. Another useful aspect to take into account is that you should not apply to more than one lender at a time. Every loan application surfaces on your credit history, and numerous applications at the same time are seen negatively by lenders.

 

Pros and cons of home loans for discharged bankrupts

 

Pros

You can still a loan. Despite the fact that it may be challenging, 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 demonstrates to the lenders that you are financially responsible.

Your credit rating will improve. Straightforward tasks like paying your bills on time and generating steady income will improve your credit rating.

 

Cons

You can’t receive a loan until you are discharged. The majority of lenders will not approve any loans to people that are undischarged to prevent jeopardizing any further financial distress.

Increased rates and fees. In general, interest rates and fees will be higher for discharged bankruptcy loans. You can only get 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 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 complexity of bankruptcy, it’s critical to seek professional advice from the experts to guarantee you understand the process and therefore make prudent financial decisions. For additional information or to speak to someone about your circumstances, contact Fresh Start Solutions Sunshine Coast on 1300 818 575 or visit http://freshstartsolutions.com.au/bankruptcy-sunshinecoast

 

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