If you filed for bankruptcy because a business person, such as a lawyer, advised you to do so, you may have realized that:
>> Bankruptcy can stay on your credit file for up to 7 years; Y
>> Bankruptcy can come back to haunt you when you’re trying to get a home loan or refinance your existing loan from a major bank.
However, don’t worry if you are discharged bankrupt and looking for a home loan or considering refinancing an existing loan, you can still get loan approval.
Fortunately, there are now a number of “specialty lenders” specifically tailored to this “niche” and willing to offer home loans or refinance existing loans to people in bankruptcy. Although these loans can come with:
>> Higher interest rates compared to regular home loans;
>> A higher deposit percentage (ie instead of the typical 20 percent, you may need more); Y
>> A fee that can be charged in addition to interest rates.
What to consider as liquidation in bankruptcy when applying for a home loan or refinance loan?
If you find yourself in bankruptcy discharged, here is a list of things to be aware of that specialized lenders may require and, more importantly, can help you obtain a post-bankruptcy home loan or home loan. refinancing:
>> You may be asked to provide a solid and transparent explanation of the situation that led to bankruptcy (eg serious illness, financial hardship, etc.);
>> You may be asked to provide evidence as part of your home loan or refinance application process to indicate that this bankruptcy was a unique situation and that you were beyond your ability to avoid it; Y
>> You may be asked to provide evidence to verify that all your financial affairs are now being carried out excellently (for example, if you are paying rent, can you produce a rent ledger to show that your rent payments are rent being paid on time?).
It can also benefit your loan application process. If you can show the “specialty lender” that you have as little unsecured liability as possible.
What types of home loans are available to discharged bankrupt?
This will depend on the “specialty lender” you choose. Here is a list of loans you can consider:
Basic home loansThese are standard home loans that are often considered straightforward loans. They generally do not offer additional extras or flexibility to pay an additional loan amount or vary your repayments.
Low Doc LoansThese are low documentation loans for people who cannot provide the required proof of income, such as recent tax returns or other financial documentation at the time of application. They are usually ideal for freelancers or contractors.
Truly, when your credit has been damaged after bankruptcy, you need to be more cautious when it comes to your finances. You should seek the help of a professionally qualified finance broker, who has a thorough understanding of the credit policies and standard requirements provided by “specialty lenders.”
