Home Loans for Discharged Bankrupt People

If you are a discharged bankrupt who is now looking to get a home loan or considering refinancing your mortgage, you will experience that most mainstream lenders/credit providers choose not to offer loans to discharged bankrupts or they apply strict credit guidelines.

Can I still get a Home Loan?

While it is challenging as a discharged bankrupt to get a home loan, it is still very much possible because there are lenders/credit providers that specialise in this "niche" market.

How Long after my Discharge can I apply for a Home Loan?

The longer you have been discharged, the better it is for you. Here is a list of when lenders/credit providers will consider your request for home loans after bankruptcy;

>> Most lenders/credit providers allow discharge bankrupts to borrow just as soon as their term of bankruptcy finishes; and

>> Others have a minimum number of years before discharged bankrupts can apply for a home loan.

How much can I borrow as a Discharged Bankrupt?

The amount you can borrow will vary for each lender/credit provider. However, most lenders/credit providers will consider loans of up to 80% of your security property's value.

What Amount of Deposit do I Need?

In most instances, it would be ideal to have at least 20% of your home's purchase price set aside as your deposit amount. As this should put you in a safe range, and should increase your chances of getting home loan approved.

What should I consider when applying for a Home Loan?

Here is a list of things to keep in mind when you are applying for a home loan and you are a discharged bankrupt:

>> You should be able to demonstrate that you have a secure and permanent employment;

>> If you are self-employed, you should be able to produce the last two years tax returns or financial statements;

>> You should have a minimum of unsecured liabilities as possible;

>> You should conduct all your financial affairs in an excellent manner (e.g. if you are paying rent through a rental estate agent, paying your bills on time will help you);

>> You should be able to provide a sound and transparent explanation regarding the situation that led you into bankruptcy (e.g. critical illness, etc.);

>> You should provide evidence as part of your loan application process, to indicate that this bankruptcy was a one-off situation, and it was well beyond your means to avoid.

Will I Be Charged any Fees and Higher Interest Rates?

As a discharged bankrupt, here is a list of factors to consider when choosing a discharged bankruptcy loan:

>> Don't expect very low interest rates as your loan interest rates may be higher than the average rates; and

>> You may want to consider the fees that lenders/credit providers will charge on top of the interest rates.

What Loan Purpose can I consider?

Discharged bankruptcy home loans can be used for any worthwhile purpose, such as:

>> Owner occupied property home purchase;

>> Refinancing home mortgage; and

>> For cash out purposes (e.g. business or consumer purposes).

What Types of Home Loans can I Consider?

These will depend on the specialised lender/credit provider you choose. Here is a list of loans you can consider:

>> Basic standard full doc home finance; or

>> Low doc or no doc home finance - They are useful if you are self-employed and cannot provide any proof of income, such as recent tax returns.

Take Help of a Finance Broker

When your credit has been damaged following a bankruptcy, you have to be more cautious when it comes to your finances. It is strongly recommended that you obtain expert advice from a finance broker who specialises in providing home loans with a discharged bankruptcy. Here is a list of skills your finance broker should have to assist you:

>> Your finance broker should be able to complete a pre-assessment of your loan application to find you the best possible solution and option; and

>> Your finance broker should have a clear understanding of the lending policies, guidelines and standard requirements for discharged bankruptcy home loans.