Home Loans For Discharged Bankrupts
A bankruptcy can stay on your credit file for 5 years after you're discharged, but you can still get a home loan.
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Most lenders won't consider a mortgage application from someone who has experienced bankruptcy, even if you've been discharged from the bankruptcy.
Discharged bankrupt? You could be eligible for one of these loans
Can I get a mortgage after my bankruptcy ends?
You can get an apply for a mortgage from the first day your bankruptcy ends. But keep in mind that your bankruptcy remains on your credit report:
- For 5 years from the start of your bankruptcy
- Or 2 years after your bankruptcy ends (whichever is later)
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.
That's why finding a specialist lender is a really good idea.
Specialist lenders for borrowers with credit problems
Some Australian lenders specialising in lending to people with troubled credit histories include:
- Pepper Money
- Red Rock Mortgages
Mortgage brokers can help too
Qualified mortgage brokers can help you find appropriate bad credit mortgages. They specialise in helping borrowers in unique circumstances and also help you craft the best possible mortgage application. This increases your chance of success and reduces the chance of your application being rejected, which can have a negative impact on your credit report.
How do I apply for a home loan as a discharged bankrupt?
It always helps to have a strong mortgage application. Here are some tips to strengthen your application even as a discharged bankrupt:
- Get your mortgage paperwork together.
- Have a good, continuous employment history.
- Provide details of your bankruptcy.
- Save a big deposit.
How can I improve my credit report?
Here are some useful guides to improving your credit report.:
Are mortgages for discharged bankrupts different to regular home loans?
A home loan from a specialist bad credit lender serves the same basic purpose as any other mortgage: it lets you borrow money to buy a property.
But there are some differences too:
- Higher interest rates. Your loan will likely have a significantly higher interest rate. But it still pays to compare and get the best possible deal.
- A higher loan-to-value-ratio (LVR). Regular mortgages usually require a 20% deposit (meaning an LVR of 80%) or even just a 5% deposit. A bad credit loan may only lend you between 55% and 70% of a property's value, meaning you will need a larger deposit. But this isn't always the case.
- More fees. Most mortgages come with fees, but bad credit loans for discharged bankrupts typically charge higher fees. This includes application fees and ongoing monthly fees.
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