Buying a Home is now possible for People with Bankruptcy

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; and 

>> 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. 

Fortunately, there are now a range of “specialist lenders” that cater specifically to this “niche” and are willing 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 higher percentage of deposit (i.e. rather than the typical 20 percent, you may need more); and 

>> A fee that may be charged on top of the interest rates. 

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

If you are a discharged bankrupt, here is a list of things you should keep in mind, which the specialist lenders may require and more importantly can help you get a home loan after bankruptcy or a refinance loan: 

>> 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; and 

>> They may require you to provide evidence to substantiate that all your financial affairs are now conducted in an excellent manner (e.g. if you are paying rent, are you able to produce a rental ledger to show that your rental payments are being paid on time). 

It can also benefit your loan application process. If you can demonstrate to the “specialist 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. They usually don’t offer additional extras or flexibility in paying off extra on the loan or varying your repayments

>> Low Doc 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. 

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 “specialist lenders”.

You will benefit by reading about Vacant Land Loans here

Some people prefer to buy a vacant block of land released for sale in new housing estates or sub-divisions and then have a home built on the vacant land according to their plans and requirements.

How do Lenders/Credit Providers treat Vacant Land Loans?

Most lenders/credit providers treat vacant land loans like any standard or normal loan. So when you offer vacant land as security you will be able to get a standard or normal loan. However, the lenders/credit providers will require that:

• The size of the block of land does not exceed a certain acreage ( i.e. this will depend on the policy of each lender/credit provider)

• The land is preferable inside major cities and regional centers as well as rural vacant land in lifestyle locations

• The land must have direct access using all-weather road. Dirt roads are acceptable as long as they are well maintained, and the property can be accessed by a standard vehicle, not a 4WD

• The land must be within the range to be connected to the electricity grid without excessive costs

• Town water and sewerage services are not required as many Australian properties have tank water or septic tanks instead

• Fully serviced and partially serviced blocks are both acceptable, however some lenders/credit providers will not approve a loan for more than 80% of the value of the property if you are unable to connect town water

• The land can be zoned rural, rural residential or the equivalent for your state or territory

• The maximum Loan to Value Ratio (LVR) for a vacant land loan is 97%. Most lenders will lend you up to 90% LVR on standalone vacant land as security

Loan Products Available for Vacant Land Loans

You must contact a reputed brokerage firm that has access to many lenders/credit providers. Its professionally qualified and expert finance brokers will assist you in choosing any of the following products:

• Standard Variable Loan

• Fixed Rate Home Loan

• Basic Home Loan

• 100% Offset Loan

• Guarantor Home Loan

• Line Of Credit Loan

• Low Doc Home loan

• Non-Genuine Savings Loan

• Refinance Home Loan

• Bad Credit Home Loan

• Construction Loans

Do I have to Build or Construct on Vacant Land?

Some lenders/credit providers will take vacant land security with no need to construct on the property in the short or long term. However, some lenders/credit providers will require you to build a house on the property (e.g. within 6-12 months of settlement). When choosing a vacant land lender/credit provider you should consider this aspect as it could force you to refinance or change lenders within 12 months of settlement if you have no intention of building on it.

Can I get a Low Doc Vacant Land Loan?

Yes, you can get a low doc vacant land loan with a specialised lender/credit provider. However, each lender/credit provider will use different low doc assessment methods, which can include any of the following;

• With BAS Low Doc

• No BAS Low Doc

• Accountants Letter Low Doc

• Trading Accounts Low Doc

• Income Declaration Low Doc

Can I Get Pre-Approval on Vacant Land Loans?

Yes, an expert finance broker can arrange pre-approval for you. You will have the peace of mind knowing that:

• You have a clear picture of what your borrowing limits are

• Your finance request has already been pre-approved, and you will know the conditions of your pre-approval

• You have the upper hand when negotiating the sale price of your vacant block of land with the vendor, real estate agents, etc.

So, these are the reasons why getting a pre-approved vacant land loan will be beneficial for you. The current low-interest rates have never made it as easy as now for you get a vacant land loan. So, do not wait anymore. The time is NOW!

If you are interested in finding out more on vacant loan loans or any other kind of low rate residential finance, simply make an appointment with Singh Finance. The firm’s home loan experts will guide you in choosing the best residential finance package.