Home Loans after Bankruptcy in Australia?

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

While it is challenging as a discharged bankrupt to get a home loan, it is still very much possible because there are Non Conforming Lenders / credit providers that specialise in Home Loans for Discharged Bankrupts.

How Long after my Discharge can I apply for Home Loans after Bankruptcy?

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;

  • Non conforming lenders/credit providers allow discharge bankrupts to borrow just as soon as their term of bankruptcy finishes (1 day from Discharge)
  • Prime Lenders have a minimum number of years before discharged bankrupts can apply for a home loan as they require a clean credit record.

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 95% of your security property’s value.

What Amount of Deposit do I Need?

In most instances, it would be ideal to have at least 5% of your home’s purchase price set aside as your deposit amount. You will also require sufficient funds for Stamp Duty, Loan costs and Risk Fees that can be as high as 2.5% of Loan amount on a 95% LVR.

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;
  • Should have a minimum of unsecured liabilities as possible;
  • Can 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.);
  • 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.

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).

Get Help from an Expert Mortgage Broker for Home Loans after Bankruptcy

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 for discharged bankrupts.