How can bankruptcy af­fect your home loan ap­pli­ca­tion?

Wangaratta Chronicle - North East Property Guide - - NEWS -

What is bankruptcy?

Bankruptcy is sim­ple. It is a le­gal process that oc­curs when you can no longer ser­vice your debts, pro­vid­ing you an av­enue in which to clear many of these debts and al­low your­self to start again in your fi­nan­cial life. Bankruptcy is cer­tainly not some­thing any­one wants to ex­pe­ri­ence, as it re­sults in se­ri­ous re­stric­tions on you as an in­di­vid­ual (your abil­ity to get credit and travel over­seas be­ing the most sig­nif­i­cant), but should at least be viewed as a ‘sec­ond chance’ of sorts for peo­ple, and is not syn­ony­mous with des­ti­tu­tion but fi­nan­cial pos­si­bil­i­ties.

Bankruptcy typ­i­cally lasts 3 years, and dur­ing this time a trustee is ap­pointed to you to mon­i­tor your fi­nan­cial po­si­tion.

Buy­ing a home af­ter bankruptcy

Be­cause bankruptcy af­fects your abil­ity to access credit, it also makes it very dif­fi­cult to se­cure a home loan. Most lenders will not pro­vide loans to those who are still in bankruptcy.

It is for this rea­son that, un­for­tu­nately, Home Loans can­not pro­vide users who have re­cently ex­pe­ri­enced bankruptcy with home loan quotes, as their suit­abil­ity for a loan by part­ner loan providers can­not be as­sured.

The good news is that those who have de­clared bankruptcy (those in a debtor’s pe­ti­tion) or those who have had bankruptcy de­clared on them (those in a cred­i­tor’s pe­ti­tion) can even­tu­ally find fi­nanc­ing, es­pe­cially af­ter the three-year life­span on bankruptcy.

The best way to se­cure fi­nanc­ing af­ter hav­ing de­clared bankruptcy is to:

Clear your debts and find steady em­ploy­ment.

Turn your fi­nan­cial po­si­tion cash-pos­i­tive.

Save a de­posit for home (20 per­cent is best and of­ten nec­es­sary for fi­nanc­ing if you have de­clared bankruptcy in the past).

Check your credit re­port, and make sure it is ac­cu­rate

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