Will I ever get a mortgage again after bankruptcy?

One of the biggest fears that people have about bankruptcy is that they will lose their home – second to this is the fear that they will be unable to own their own home in the future. This fear is unnecessary, for there is nothing to stop you from getting a mortgage after you have come out of bankruptcy, although you may have to wait until your credit file is clear, is all.

Being declared bankrupt will place a default on your credit file that lasts for seven years. Bankruptcy itself generally lasts for three years, so you should have a four year period there where you are not bankrupt but will still have a mark on your credit file. This does not necessarily stop you from being granted a mortgage, as secured debts such as these are sometimes easier to get approved for. The banks know that if you do not pay the debt, they will be able to sell the house and get their money back that way. But if you do get approved while you have a mark on your file, you might find that you are given a slightly higher interest rate, or are required to have a larger deposit.

For most people who have come out of bankruptcy it is simply easier to wait until the default is gone from their credit file. After the default is gone there will still be a permanent record of the bankruptcy held on the National Personal Insolvency Index, but this index requires one to pay a fee to access it, so it is generally not used by the banks for credit-checking purposes. Waiting that little bit longer can work in your favour because:

a)    you will have a better chance of being accepted on your first go; and

b)    you will have more time to save a larger deposit.

Quite often, bankruptcy is not nearly as bad as people fear, and this is true in respect of getting a mortgage in the future. Any record of the bankruptcy on your credit file is cleared after seven years, so as long as the rest of your application is in order, there should be no reason why you would not be approved. If you are still concerned about bankruptcy and the effect it will have on your future, call the Australian Bankruptcy Service today on 1800 462 767 for free and confidential advice.




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