Home Loans for Ex Bankrupts in Australia

by Rae E. Non Conforming Loans

If you filed for bankruptcy, because, you were advised to do so by a business person such as a solicitor, you may have realised that Bankruptcy can stay on your credit file for up to 7 years. Bankruptcy can come back to haunt you when you are trying to get a home loan or refinance your existing loan from one of the major banks.

But, do not worry if you are a discharged bankrupt looking for a home loan or considering refinancing an existing loan, you can still get loan approval.

There are now a range of “non conforming lenders” that specialise in this “niche” and are able to offer home loans or refinance existing loans to people with discharged bankruptcy. Although these loans can come with:

A higher interest rates compared to regular home loans
A fee that may be charged on top of the interest rates.

What to consider as a Discharged Bankrupt when applying for a Home Loan or a Refinance Loan?

If you are a Discharged Bankrupt, a lender will require certainty that you will not get into difficulty again.

They may require you to provide a sound and transparent explanation regarding the situation that led you into bankruptcy (e.g. critical illness, financial difficulty, etc.)
They may require you to provide evidence as part of your home loan or refinance application process, to indicate that this bankruptcy was a one-off situation, and that it was well beyond your means to avoid
They may require you to provide evidence to substantiate that all your financial affairs are now conducted in an excellent manner.
It can also benefit your loan application process. If you can demonstrate to the “non conforming lender” that you have a minimum of unsecured liabilities as is possible.

What types of Home loans are available to Discharged Bankrupts?

This will depend on the “specialist lender” you choose. Here is a list of loans you can consider:

Basic Home Loans: These are standard home loans that are often considered a no-frills loan. Maximum Loan is up to 95% of Property Value (you will require extra for stamp duty and costs if purchasing)

Low Doc Home Loans: These are low documentation home loans for people who are unable to supply required proof of income, such as recent tax returns or other financial documentation at the time of the application. They are usually ideal for self-employed individuals or contractors and are to a maximum of 85% of purchase price.

Truly, when your credit has been damaged following a bankruptcy, you have to be more cautious when it comes to your finances. You should take help of a professionally qualified finance broker, who has a thorough knowledge of the credit policies and standard requirements provided by the “non conforming lender“.