When can you apply for a home loan after bankruptcy?

  • Discharged bankrupt: You can borrow up to 90% of the purchase price of a property but you’ll need 14% to 16% of the purchase price to cover your deposit, stamp duty and Lenders Mortgage Insurance (LMI).
  • Undischarged bankrupt: We can’t assist you with a home loan if you’re currently bankrupt but a specialist financier may be able to assist you.

Please fill in our online assessment form or give us a call on 1300 889 743 and one of our mortgage brokers can let you know what your options are.

Will I get a discounted interest rate?

In most cases, you’ll pay a higher interest rate for your loan.

However, we’ve made an agreement with some of our lenders to obtain normal home loan interest rates for customers who are now in a good financial position.

Discounted rates may be available if:

  • Your loan is for no more than 80% of the property value.
  • You can provide evidence that you now pay your bills on time, e.g. a rental history.
  • You can provide evidence that the bankruptcy was a one-off event that wasn’t your fault.
  • You’ve been discharged for a particular period of time, e.g. one year.

We can’t guarantee that we can get you normal bank interest rates. Every application is assessed on its merits. Please call us on 1300 889 743 to discuss your situation.

Are low doc loans available?

Yes, it’s possible for discharged bankrupts to qualify for a low doc loan.

You must meet standard low doc criteria; provide limited income evidence in the form of BAS, an accountants letter or business bank statements and have a reasonable explanation for your past credit history.

Can I refinance my current home loan?

Most people lose their properties when they declare themselves bankrupt.

A few people manage to keep their homes or have purchased a home since being discharged.

You can refinance to a new lender if you have an excellent repayment history on your current home loan.

Lenders ask for statements to prove that your last 6 to 12 months repayments have been on time.

What is discharged bankruptcy?

The term ‘discharged’ is purely an automatic process of the law which releases the bankrupt from bankruptcy.

What does this mean in plain English?

When you are discharged from bankruptcy, you are no longer bankrupt and no longer required to have limited assets and are able to travel overseas.

However, the bankrupt estate continues and the now ex-bankrupt still has an obligation to cooperate with the trustee.

From a finance point of view, it means that you are now able to apply for credit again.

Save yourself the hassle of approaching the major banks.

You will find that they cannot approve your home loan application while the bankruptcy listing is still on your credit file.

How long does the bankruptcy stay on my credit file?

A record of the bankruptcy will remain on your credit file for up to 5 or even 7 years even after you are discharged.

You will also have a permanent record listed on the National Personal Insolvency Index (NPII).

Rebuilding a positive credit history

People that are ex-bankrupt may need to undertake some additional steps to “prove themselves” as good borrowers.

Pay your bills on time

Make sure that you pay all of your bills, utilities and rent on time.

If you end up with another black mark on your credit file then it makes you look like a repeat offender.

Most importantly, avoid applying for new credit where possible, particularly unsecured debt and personal loans.

Every credit enquiry you make is recorded on your credit file.

Generally speaking, any more than two enquiries over six months can break your application.

Avoid applying with a lender directly

Each lender has very different lending policies when it comes to considering borrowers who are discharged bankrupt.

By applying with banks at random, you risk being declined.

The more lenders you apply with, the more unnecessary enquiries you add to your credit file, further reducing your chances at approval.

You can also forget the idea of trying to hide your financial history from the lender because your credit file is accessible to all credit providers.

A better option is to be upfront with the lender before you start the application process.

Build your savings

Start building your genuine savings by making regular deposits into a savings account.

This proves to the banks that you are now in a better financial position and, for all intents and purposes, in a position to make regular home loan repayments.

Once approved, make your repayments on time

Don’t even be a day late, particularly since the introduction of positive credit reporting and the focus on repayment history.

The reason is that it is hard for us to refinance your home loan back to a major bank at a cheaper interest rate if your repayment history isn’t perfect.

The goal is to show that the problems that happened are in the past and that you are now a credit-worthy borrower.

Speak with a specialist in bad credit

Our mortgage brokers are credit experts who understand the challenges faced by borrowers who are discharged bankrupt.

Call us on 1300 889 743 or complete our online enquiry form and we can apply with a lender that will consider your situation.

  • Alana

    How long will bankruptcy stay on my credit file after being discharged?

  • Hi Alana, bankruptcy can stay for up to 7 years on your credit file – 5 years from the day you become bankrupt and then 2 years starting from the day the bankruptcy ends.

  • Erman Nehir

    If i have bad credit or bankrupt, can i borrow money from family and buy my home? Many thanks

  • Hi Erman,

    If you have bad credit this is no problem. If you are currently bankrupt then it is best to wait until you are discharged. If you are discharged from bankruptcy then this is fine to buy a home.

    Most people borrow a deposit from their family or are gifted a deposit and then borrow the rest from a specialist lender. You must be able to afford the repayments to your family and the loan from our lender to get approved. It’s best to borrow 80% from a lender and 20% or a little more from your family to cover the deposit and purchasing costs. You can make it 90% and 10% if you like but the interest rate will be higher.

    Best of luck with buying a home.

  • Erman Nehir

    Thanks. Could you please tell me , if i hAve bad credit and my family helps me to buy an apartment, what happens if i can not pay my previous debts which caused bad credit? Can they take my apartment?

    And what happens if i buy my apartment during my bankruptcy? Can they also take my apartment?
    Many thanks

  • Hi Erman
    That’s a complex question and outside my area of expertise. Best to ask a solicitor as we’re specialists in home loans not asset protection.

  • DMatra

    I’m discharged bankrupt but I would like to get a home loan as soon as possible. I want to know just how much LMI premium I can expect to be charged so I can plan things accordingly.

  • Hey DMatra,

    You can have a crack at our LMI calculator to get an estimate on the amount of LMI premium that you may have to pay. You’ll be given an estimation between a few different lenders and the cheapest one will be highlighted. You can check it out here:
    https://www.homeloanexperts.com.au/lenders-mortgage-insurance/lmi-calculator/

  • Umbridge

    Hi, can your brokers help with the calculations of my BAS income? I’m just confused.

  • Hi Umbridge,
    It can be easier for you to first have a crack at our BAS income calculator and then enquire online directly through the page. Here’s the link to the calculator (instructions are on the page itself):
    https://www.homeloanexperts.com.au/mortgage-calculators/bas-statement-income-calculator/

  • Poole

    I was discharged bankrupt 2 years ago but am now in a great place financially. I want to borrow 80% to buy a house in a rural-ish area. I enquired with a bank about this recently and found out that it was classified a category 3 location and that they wouldn’t lend. The bankruptcy is no longer on my credit file and my credit score is a bit above average now. I need to find a lender that can accept my application!

  • Hi, we have a few lenders in mind that may be able to help but even though 80% is a relatively low percentage of the property value, it may be more likely for you to secure home loan approval if you can go a bit lower. Please contact one of our credit specialists on 1300 889 743 and discuss your personal situation and loan needs in detail or simply enquire online and one of us will contact you within 24 hours:
    https://www.homeloanexperts.com.au/free-quote/

  • Matt E

    I was discharged bankrupt 10 months ago and am currently unemployed. My wife does cash in hand jobs here and there. We get income protection payments of $4,200 per month and can provide income verification documents to prove this. Can it be possible for us to get a 90% capped LMI home loan?

  • Hey Matt,
    It may be possible to qualify for a home loan with some specialist or non-bank lenders but we will first need to properly assess your situation and loan needs to be able to determine this. From the looks of it, banks may find serviceability (your ability to repay the loan) to be an issue. Other factors will also come into play such as the type and location of the property and which lender you actually apply with. Please call 1300 889 743 and speak with one of our mortgage brokers to find out your options.

  • Hollie Whittaker

    My husband is due to be discharged from bankruptcy in the next few months. I currently have a home loan and an investment loan in my name, will we be able to refinance them to add his name and possibly increase the loan to access some equity in the properties?

  • Hi Hollie,

    Normally, bankruptcy will remain in your credit file for 5 years. You may not be able to go with a prime lender before it’s been removed from your file. You may be able to add your husband on the loan and increase it but the rates will likely be high as there’s a high chance that it will go to specialist lender.

  • Lee Williams

    Hi is it possible to get a home loan to buy land and build once discharged bankrupt? I will have at least 20% deposit but not enough to buy the land outright.

  • Hi Lee,
    It’s case by case, but yes this can be done. We have at least 2 lenders that can consider this. Please give us a buzz tomorrow afternoon and ask for Shaba.

  • Narelle

    My husband will be discharged from bankruptcy in a couple of months. Are there any lenders who will loan to a discharged bankrupt up to 90% of the purchase price of the home?
    We have been told it is a minimum 20% deposit + fees (Inc mortgage insurance/stamp duty) + 2% added to the loan rate.

  • Hi Narelle,
    Yes we can help you to borrow up to 95% including lender fees such as mortgage insurance as long as your husband is discharged.

    The loan gets more expensive the more you borrow. So an 80% loan is cheaper than a 95% loan. Usually people borrow 90% or 95% to get into the market and then when they are > 2 years discharged and owe < 80% of the property value then we can refinance to a lender we have that does normal bank rates for discharged bankrupt.

    How much are you looking to buy a home for?

  • Narelle

    Thank you for this. Do you have a phone number I am able to contact to chat through?
    Thanks

  • Hi Narelle,
    Sure call us on 1300889743 and ask for Mitri as he’s our specialist in discharged bankrupt.

  • Matthew

    I’ve been discharged from my debt agreement last May. I’m planning to buy a 2-bedroom house in Ambarvale. So, I want to know how much I can borrow for my home loan application?

  • Hi Matthew,
    The major lenders require you to be discharged from your debt agreement for at least 12 to 24 months. However, there are a couple of banks who accept even 6 months discharge. These lenders can consider a loan for up to 95% of the property value, while most of the lenders will lend you only 80%. Please call us on 1300 889 743 and one of our mortgage brokers will let you know your options.

  • CatCat

    Hi, I declared bankruptcy 10 years ago, it is no longer in my credit report, and when doing a credit score check I have an “excellent”. What is the likelihood I can get a loan with a normal interest rate? The loan will be with my partner, who has unblemished credit and also a large amount of equity in his house.

  • Hi Cat,
    Yes we can get you a normal interest rate. Note that some lenders will be aware that you were bankrupt as they do a Bankruptcy Register Search (also known as the BRS). As you would be recorded in the National Personal Insolvency Index (NPII) the BRS would show this to the lender. In addition to this any lender that was involved in the bankruptcy e.g. if CBA, NAB or St George had given you a credit card and it was written off in the bankruptcy, then they would know of the bankruptcy and also they rarely forgive someone once they’ve been burned!
    So the key to getting a good rate is to apply with the right lender. We have some that give discounted home loan rates even if they are aware that you have been bankrupt in the past. Your partner’s clear credit history will help as well.

  • Antonnia

    I have recently had a bankruptcy cleared off my credit history. I served my 5 years. I’m looking to buy a property in Ambarvale and its listing price is $565000. Can I still get a 95% home loan?

  • Hi Antonnia,
    We can assist you to borrow 95% of the property including lenders mortgage insurance if you have been discharged. Bear in mind that the loan gets more expensive the more you borrow. So, an 80% loan is cheaper than a 95% loan.
    Usually people borrow 90% or 95% to enter into the property market. When they are discharged for more than 2 years and owe less than 80% of the property value then we can refinance them to a lender in our panel that gives normal bank rates for discharged bankrupt.

  • Rachael

    I was discharged from my bankruptcy in april 2015. I read that it will stay on my record for 5 years. Is it 5 years from start of bankruptcy in april 2012, or from the end in april 2015? Both my husband and i were bankrupt at same time. Now we want to buy our 1st home with a 5% deposit = 95% home loan. Can we get a loan? What options are available to us? Any feedback would be appreciated.

  • Hi Rachael,
    I believe it’s 5 years from when it was listed in 2012. So you should be clear now. Note that many lenders will still have a record of your bankruptcy even though it’s no longer on your credit file so it’s important to apply with the right lender.
    You should qualify for a 95% home loan however after LMI it’s likely you’ll end up with approx 91.5% or so. So you may need a little more in funds or a family member with real estate to guarantee your loan.
    I’ll email you and cc one of our discharged bankruptcy specialist mortgage brokers. They can check your credit file to find out if you’re now clear or not.

  • Mauri Mauri

    Hi there, I was discharged from my bankruptcy in February and I am looking at purchasing a small investment property borrowing a max of $180000. Since entering the bankruptcy back in 2014 I stopped being self employed and commenced employment with a major airline and this October will mark 4 years with that company. My wife has been with her company for six years and we have been able to save $30000 and continue to put on average $1500 a month in savings after all our expenses for the month. Any assistance would be greatly appreciated.

  • Hi
    You can likely borrow 90% including LMI so that would be around 88%. With $30,000 in savings this may be able to work. This is a difficult loan and would require much more work so there would be a brokerage fee of $2,500. If we cannot help you to get approved then there are no fees for our services. I’ll email you and cc one of our brokers who specialises in this area of lending.

  • Mauri Mauri

    Thank you

  • Hitchcock

    Due to a family event, I was declared bankrupt years ago. I was discharged from bankruptcy late 2017. I was wondering what is the process for me and my fiance to get a home loan?

  • Hi Hitchcock,
    As you were discharged from bankruptcy less than a year ago, the process will be similar to a standard home loan. Also, you might have to provide additional documents to confirm your applying for a home loan after bankruptcy. There are certainly lenders who can help get a home loan if you have only been discharged from bankruptcy for less than two years. However, these lenders will require to have at least 10-20% of the property value as a deposit and will charge you a higher interest rate.

    If you’re still happy to proceed, the good news is that we can refinance you back to a major lender at a much better interest rate in 2-3 years’ time as long as you make your repayments in full, on time, every time. Please fill in our online enquiry form https://www.homeloanexperts.com.au/free-quote/ and tell us a little more about your situation and the circumstances surrounding your bankruptcy. Providing valid reasons, such as divorce or the loss of a job will give you a better chance at approval.

  • JP

    Hello, my husband and I are currently both bankrupt and due for discharge in 2019. I am aware we should not apply for a home loan within the first 2 years of being discharged, but we are thinking ahead. What sort of deposit is needed on say a $600,000 loan? And what proof of being smart with money other than savings? We can show regular rent payments from the last several years, our electricity payments, etc. Is there an email address where I can contact someone for more information? Thank you.

  • Hi Jade
    You can apply for a home loan for up to 95% of the property value once you are discharged for 1 day. However with LMI you actually only get 92% – 93%. Then once you have been discharged for over 2 years we can refinance to a cheaper loan. This is what most people do.
    I’d recommend that you provide:
    – Perfect rental history
    – A history of savings (in a separate savings account, increasing balance each month)
    The savings is the most important. Saving money yourself shows you are very diligent and are a low risk to the lender.
    I’ll email you and cc our Assistance Broker team who can give you a prepare to buy report with more tips to help you prepare.

  • Curran

    Hi there, we’re planning to buy a property. I have a good credit history and my partner is discharged bankrupt. She was discharged last year in August. We were wondering whether we can borrow for a home loan? We are looking in the range of $450,000 in the Gold Coast area.

  • Hi Curran,
    As she was discharged about ten months ago, some lenders might consider your situation. However, lender options might be limited and you will be charged a higher interest rate than the rates offered by a major bank. Lenders may want to know the reason for the bankruptcy and whether it has been cleared from your credit file. You can generally borrow up to 80% of the property price.

  • Douglas

    I will be discharged from my bankruptcy next week both me and my partner work full time and want to buy out first home we have a deposit. How much can we borrow?

  • Hi Douglas,
    We can usually get people with a discharged bankruptcy listing approved as long as the loan is for 95% of the property value or less. You’ll need 8% to 10% of the purchase price to cover your deposit, stamp duty and Lenders Mortgage Insurance (LMI). To qualify, you both must have clear credit history for 2 years after being discharged from bankruptcy. Call us on 1300 889 743 or fill your online assessment form https://www.homeloanexperts.com.au/free-quote/ to discuss your situation.

  • Joel Wilson

    Hey, ive been discharged for over two years now, my wife and i bought a house for $375,000 a couple of months out of me being discharged, we currently owe $296,000. I have a great job and have been with the same company for over two years, Now that i have done the time i would like to refinance to a better interest rate. What are my options and what sort of interest rate could i be looking at. Thanks in advance.

  • Jaspal

    Hi, my wife and I were discharged from voluntary bankruptcy last month. We’re looking to buy our first home, the full price with a bit for legal fees is $240,000. We can put down a 20% deposit ($48,000) or our parents can go guarantor. Can you do both or does one negate the other?

  • Hi Jaspal,
    Guarantors may not be an option because of your adverse credit issues, lenders will deem it too risky for the guarantors. However, with a 20% deposit you could qualify for a mortgage with a few of our lenders even if you’ve been discharged from bankruptcy just one day prior.

  • Kerri

    I have 2 discharged bankruptcies, one in the 90s and one from 2007. I am on a full disability support pension, have a good rental history and recently paid off a car loan. I’ve gotten super out early and have around $40k to use as a deposit. I’m looking at a property around $150-175k. Do you think I could get a normal home loan with competitive interest rate?

    Cheers

    Kerri

  • Hi Kerri,
    Unfortunately, we’re unable to help you qualify for a home loan if the sole source of your income is a disability support pension. However, there are a few lenders such as St George, Westpac and Pepper who can accept that income. You would need to provide a letter from the relevant government department (Centrelink) confirming the current benefit and payment frequency. Your deposit and your rental history would be looked at favourably. Warm regards.

  • Kerri

    OK, thanks for the reply.