Home Loans For Discharged Bankrupts

Rates and Fees verified correct on October 26th, 2016

Bankruptcy can stay on your credit file for up to seven years, but this doesn't have to stop you from getting a home loanHome loans for discharged bankrupts

Bankruptcy can happen for many reasons, many of which might not be your fault.

Unfortunately, your credit file doesn't list the reasons behind your bankruptcy, meaning you could find it very difficult to get any sort of home loan even once you're discharged.

Because these listings stay on your credit file for seven years, this can put your dreams of owning a home on hold.

Luckily, there are now a range of specialist lenders willing to offer home loans, some of which will consider borrowers who have been discharged from bankruptcy for as little as one day. While these can come with higher rates and fees, they're an option to help you get into a home or refinance an existing loan without having to wait so long.

Discharged bankrupt? Don't apply for another home loan until you've spoken to one of these lenders

DetailsWhat can they help with?
ClickLoans The Online Home Loan Bad CreditClickLoansClickLoans is an online-only lender that offers home loans for both self-employed and PAYG borrowers who may have bad credit.Purchasing, RefinancingEnquiremore info
Pepper MoneyPepper Home LoansPepper specialises in providing fair home loans to those who are credit impaired - from small defaults all the way up to discharged bankruptcies. They also cater to self-employed borrowers.RefinancingEnquiremore info
FreedomLoanstable1Freedom LoansFreedom Loans have over a decade in experience in helping Australians with bad credit to obtain the best possible home loan they qualify for. They can help you even if you’ve been declined elsewhere and assist borrowers who are full time, part time, casual or self-employed.Purchasing, Building, RefinancingEnquiremore info

ALSO READ: Were you looking for a personal loan for bankrupts? Read our guide

What is discharged bankruptcy?

Declaring bankruptcy has certain repercussions. You will be an ‘undischarged bankrupt’, meaning that you are still undergoing the process of bankruptcy. A trustee will be nominated by the Australian Financial Security Authority (AFSA) to manage your financial affairs until the period of bankruptcy ends. A discharged bankruptcy means that you are no longer bankrupt. Bankruptcy usually lasts for three years, but may be extended depending on certain conditions or as determined by the trustee. A permanent record of the bankruptcy will be on the National Personal Insolvency Index (the NPII). Your credit report will also be strongly affected, because reporting agencies keep record of it for up to seven years.

Your spending power will be limited, and most of your assets, particularly property, can be sold. You are restricted from managing a company or holding certain public positions and income past a certain limit will have contributions deducted from it. Travel overseas is prohibited unless allowed by the trustee.

Is a mortgage possible after bankruptcy?

Some specialist lenders offer home loans to discharged bankrupts, but usually with different and stricter terms and conditions, owing to the borrower’s history of bad finances. These products usually require a larger deposit, so you may need more than the standard 20% of the purchase price. These loans also usually have higher interest rates compared to regular home loans.

Approval for discharged bankrupts varies differently for every lender. Some provide discounts and lower rates, depending on the circumstances of your bankruptcy and the current state of your finances, as well as good rental history (if applicable). The timeframe between your discharge and loan application may also affect the outcome. At least two years is recommended.

While most banks and financial providers choose not to offer loans to discharged bankrupts (particularly the bankruptcy ended recently), there are those that cater specifically to this niche. Some offer regular loans with slightly different rates and conditions, while others also offer low income home loans.

What should you watch out for when applying for a home loan as a discharged bankrupt?

When your credit has been damaged following a bankruptcy, you have to be more cautious when it comes to your finances. In particular, you have to be prudent when it comes to applying for a home loan.

When choosing a lender, look for one that not only offers loans to discharged bankrupts, but also one that has a good track record and reputation. This ensures that your application will have a higher chance of approval and that you will be offered terms that are fair, even though rates are generally offered at a premium for these kinds of loans. Being cautious also helps because there are some questionable credit lenders in the market, all of whom wouldn't think twice about offering unreasonable rates.

One thing you must remember is that you should not apply to more than one lender at a time, and try not to apply to another lender immediately after a denied application. Every application for a loan, regardless of the reason, appears on your credit file. This shouldn't be a problem if you only apply for a loan once in a while. However, serial borrowing is viewed negatively by lenders, all of whom review your credit history at application. If you've already gone through several loan applications and have been denied, there are still ways you can clear up your enquiry history.

What are the types of home loans available if you've previously been bankrupt?

The good news for discharged bankrupts is that there are still a few different kinds of loans available for them. These will be dependent on the lender you choose, but the loans you can generally choose from include:

  • Basic home loans: These are standard home loans that are an option for those who are looking for a budget-friendly loan. With discharged bankrupts, however, many extra features such as a pre-purchase approval may not be available.
  • Low doc loans: Low doc loans are options for people who cannot provide any proof of income, such as recent tax returns or other financial documentation. Instead, borrowers are asked to declare their annual income, and in turn are required to pay a higher interest rate. These are usually ideal for self-employed individuals or freelancers.
  • Package home loans: These types of home loans usually offer additional services aside from the loan itself, such as credit cards or transaction accounts.

How to compare specialist home loans

Certain factors can affect your choice of home loan provider. First, you have to ensure that the lender offers home loans to discharged bankrupts, and preferably has a good track record. Remember, every application shows up in your credit history, and if you get rejected it will show up on your credit file.

The second factor would be the loan's interest rates. Don't expect very low interest rates as a discharged bankrupt, unless you have a large deposit set aside for a down payment or have been diligent in paying your bills since your discharge.

Another factor you may want to consider are the fees that the lender will charge on top of the interest rates. Then there are the features that come with these loans. Some lenders offer extras such as revolving credit lines, offset accounts, or all-in-one accounts. However, most loans available to discharged bankrupts are basic, no-frill loans, meaning limited additional features.

Pros and cons of home loans for discharged bankrupts

Here are a few things to keep in mind when considering applying for a home loan for discharged bankrupts.


  • You can still get a loan. While getting a loan as a discharged bankrupt can be challenging, it’s still possible. Pick a provider that has a good track record and ask them about their lending services to discharged bankrupts.
  • The longer you've been discharged, the better. This is particularly true if you've been doing what you can to rebuild your finances during that time. It gives lenders the assurance that you are financially responsible and can pay back your home loan.
  • Paying your bills on time helps. If you've been diligently paying your bills after your bankruptcy has been discharged, it's a good sign for the lenders and they will be more likely to approve your home loan.


  • You have to wait until you are discharged. While most lenders have different guidelines for their loans, the majority will not lend funds to anyone who is still bankrupt. This is to avoid the possibility of adding to your financial trouble and also because they have no guarantee of being repaid the loan.
  • Higher interest rate. While discharged bankrupts can get a loan, the interest rates will generally be higher than regular home loans. Lower rates are possible, but you may need to have a higher amount deposited in your bank account, or a higher deposit.
  • Record of bankruptcy. Your record of bankruptcy will be stored up for seven years after your discharge, and your name will forever be on the National Personal Insolvency Index (NPII). This will be a factor when lenders take a look at your financial history.

Frequently Asked Questions

How long after my discharge before I can apply for a loan?

Most lenders allow discharged bankrupts to borrow just as soon as their term finishes. In some cases, others have a minimum number of years before they can apply for a loan, and a minimum deposit may be required. As mentioned, the longer time you have been discharged, the better.

I want to set aside money for a down payment before I apply for a loan. How much would I need?

It depends what sort of loan you are applying for. For home loans, it would be ideal to have at least 20% of the home's purchase price as your deposit amount. This puts you in a safe range, and increases your chance of getting the loan approved.

How much can I get as a discharged bankrupt?

The amount you can borrow varies for each lender, but most are in agreement that discharged bankrupts can borrow 60 - 80% of the property’s purchase price.

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13 Responses to Home Loans For Discharged Bankrupts

  1. Default Gravatar
    Grace | September 16, 2016

    Hi. I am applying for a surname change and one of the questions is about bankruptcy. How can I find out the discharge date of my bankruptcy and how can I get a copy of the letter of discharge?

    • Staff
      Jodie | September 16, 2016

      Hi Grace,

      Thank you for contacting finder.com.au we are a financial comparison service and are not qualified financial experts.

      According to the Australian Financial Security Authority website your bankruptcy discharge should be recorded on the National Personal Insolvency Index that you can search to find the details of. The Australian Financial Security Authority will have some information on how to get a copy of your letter of discharge as well.


  2. Default Gravatar
    Grace | September 15, 2016

    Hi. I’m applying to have my surname changed and one of the questions is about bankruptcy. How can I find out the date my bankruptcy ended?

    • Staff
      Jodie | September 16, 2016

      Hi Grace,

      Thank you for contacting finder.com.au we are a financial comparison service and are not qualified financial experts.

      According to the Australian Financial Security Authority website your bankruptcy discharge should be recorded on the National Personal Insolvency Index that you can search to find the details of.


    • Default Gravatar
      Grace | September 16, 2016

      Hi Jodie. I went on that site but it costs to find out….

    • Staff
      Jodie | September 16, 2016

      Hi Grace,

      Unfortunately I don’t know of any other service that allows you to get the documentation without a fee, you would need to speak to an accountant or financial advisor.


  3. Default Gravatar
    Nic | November 12, 2015

    Im a discharged bankrupt for more than 7 years. I have not tried to get any credit in this time. Will my history still effect my chances of getting a loan.

    • Staff
      Belinda | November 13, 2015

      Hi Nic,

      Thanks for your enquiry.

      Although bankruptcy can remain on your credit file for up to 7 years, there are numerous specialist brokers and lenders that are willing to offer home loans to discharged bankrupts.

      Keep in mind that lenders generally charge a higher interest rate with these loans compared to standard home loans as a precautionary measure.

      Above on this page, you can compare these lenders on this page and click on the ‘enquire’ button to be redirected to their website for further details.


  4. Default Gravatar
    Amy | June 17, 2015

    I am going bankrupt and my plan is that once i am discharged to look at purchasing a house where do i stand and what do i do?

    • Staff
      Belinda | June 17, 2015

      Hi Amy,

      Thanks for your enquiry.

      On this page, you’ll find a list of lenders listed above that offer home loans for discharged bankrupts. Your best course of action would be to contact one of these lenders to discuss your options.

      You might also be interested to learn more about how you can get approved for a home loan with bad credit on this page.

      Kind regards,

  5. Default Gravatar
    Nick | August 14, 2014

    If I’m co-borrowing with someone who isn’t an ex-bankrupt, does this make a difference to your lending options?

    • Staff
      Shirley | August 18, 2014

      Hi Nick,

      Thanks for your question.

      It does widen your lending options a bit, as the lender will consider the combined credit histories of both applicants.

      Having said that, it might not widen your options a whole lot, especially if the bankruptcy occurred less than seven years ago.

      If you’d like, you may want to consider a mortgage broker who can help find a home loan for your situation.

      All the best,

    • Staff
      Marc | August 18, 2014

      Hi Nick,
      thanks for the question.

      When co-borrowing with someone, both of your credit histories will be taken into account when your lender is deciding whether to approve your application or not. This means that even if one borrower has a clean credit history, if the other has negative listings, you may have trouble getting approved for a loan from a regular bank. In these cases it may be helpful to seek the services of a mortgage broker or a bad credit lender to help you find a loan.

      I hope this helps,

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