A bad credit rating or bankruptcy does not always disqualify you for a mortgage.
It does however mean that you will have to adhere to stricter loan terms and conditions and potentially higher fees and interest rates.
When you apply for bankruptcy, you are identified as a an “undischarged bankrupt”, meaning that you are still in the process of insolvency, which usually lasts for 3 years.
During this period, you are limited in the assets that you can own and you cannot travel overseas and apply for credit products.
The Australian Financial Security Authority will nominate a trustee, to look over your financial affairs until the end of this period, or until the trustee determines that you can look after your own affairs again, then you will be classified as a discharged bankrupt.
The bankruptcy is recorded on your credit report for 7 years and will be permanently listed on the National Personal Insolvency Index.
Here are some tips when applying for a home loan after bankruptcy:
- Wait at least 2 years before applying for a loan so that you can rebuild a good credit history
- Seek out a specialist mortgage lender who deals with predominantly with discharged bankrupts and other special circumstances
- Choose a home loan that suits your current financial situation
- Save as much as you can for a deposit as it may be more than the standard 20%
- Don’t apply for several loans- multiple applications in a short period, can leave a bad impression
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