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Home loans for discharged bankrupts
A bankruptcy can stay on your credit file for 2 years after you're discharged, but you can still get a home loan.
What different scores mean
9+
Excellent
These home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
Key takeaways
- Most lenders won't consider a mortgage application from someone who has experienced bankruptcy, even if you've been discharged from the bankruptcy.
- But there are specialist bad credit lenders who can help, like Pepper Money, Savvy and Liberty.
- You will still need to be discharged from bankruptcy. And you'll have to get a loan with a higher interest rate.
Lenders who accept discharged bankrupts
Most lenders won't consider a mortgage application from someone who has experienced bankruptcy, even if you've been discharged from the bankruptcy.
But there are specialist bad credit lenders and brokers who can help, such as:
- Pepper Money
- Savvy
- Red Rock Mortgages
- Liberty
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.
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 five years, this can put your dreams of owning a home on hold.
That's why finding a specialist lender is a really good idea.
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.:
Check your credit score for free right now
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.
Frequently asked questions
What is Finder Score?
The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
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If I’m co-borrowing with someone who isn’t an ex-bankrupt, does this make a difference to your lending options?
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,
Shirley
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 home loan to help you find a loan.
I hope this helps,
Marc