April 25, 2017Comments Closed

What Happens When You Declare Bankruptcy and Buying A Home

Posted by:admin onApril 25, 2017

Bankruptcy Experts Mount Isa

 

Whilst bankruptcy has lots of financial repercussions, it certainly doesn’t suggest the end of the world. Many people file for bankruptcy for a number of reasons, and this amount only grows with the harsh economic conditions that we experience today. According to data 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 essential so you become mindful of exactly what transpires financially when you declare bankruptcy.

There are two types of bankruptcy: undischarged bankruptcy and discharged bankruptcy. Undischarged bankruptcy signifies that you are still in the process of bankruptcy and are unable to obtain any type of loan. Discharged bankruptcy indicates that you are no longer bankrupt, and can obtain a loan with numerous specialist lenders. Bankruptcy ordinarily lasts for three years however can be lengthened in some circumstances.

Sadly, the banks do not provide the reasons for your bankruptcy and this can make it really difficult to get a home loan approved when you’re eventually discharged. Whether you will be able to purchase a home after bankruptcy rests on a range of factors, for instance the type of loan you’re looking for and how you control your credit rating once declared bankrupt. What’s certain is that your spending capability will be restricted, and repossession of property is typical.

Can you get a home loan approved after bankruptcy?

There are a number of specialist lenders supplying home loans to borrowers that have been discharged from bankruptcy for only one day. While most of these loans feature a higher interest rate and charges, they are still an option for those that are eager. Much of the time, a bigger deposit is needed and there are more stringent terms and conditions in comparison to regular home loans.

There are lots of differences between lenders for discharged bankruptcy loan approvals. A few lenders will even offer reduced interest rates to individuals whose finances are in good shape and who have good rental history, if relevant. The amount of time between your discharge and loan application will equally influence the outcome of your application. Two years is normally recommended. Furthermore, sustaining a stable income and employment are also factors which will be taken into consideration. A lot of bankrupt individuals will also proactively attempt to improve their credit rating promptly to decrease the strain of bankruptcy once discharged.

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

Selecting a suitable lender is important, so it’s a good idea to go with a lender that not only grants loans to discharged bankrupts but one that is recognised and respectable. By doing this, you’ll feel comfortable that you’re getting reasonable terms and conditions and your application is more likely to be approved. There are some suspicious lenders on the market that exploit the financially vulnerable, so please beware. Another key factor to take into account is that you should not apply to more than one lender at a time. Every loan application appears on your credit history, and several 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 challenging, 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 rebuilding your finances shows 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. Most lenders will not approve any loans to individuals that are undischarged to avoid jeopardizing any additional 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 a pleasurable experience, but it doesn’t imply that you’ll never own a home again. As a result of the intricacy of bankruptcy, it’s imperative to seek professional advice from the experts to guarantee you understand the process and therefore make sound financial decisions. To learn more or to speak to someone about your scenario, contact Bankruptcy Experts Mount Isa on 1300 795 575 or visit http://www.bankruptcyexpertsmountisa.com.au

 

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