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’re discharged from bankruptcy, you’re no longer bankrupt and no longer required to have limited assets and no overseas travel.

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’re now able to apply for credit again.

Save yourself the hassle of approaching the major banks – you’ll find that they can’t approve your application while the bankruptcy listing is still on your credit file.

Rebuilding a positive credit history

Did you know that as a ex-bankrupt you can “prove yourself”? You’ll need to establish a new credit history by opening new accounts and managing them well.

Firstly, make sure that you regularly pay all of your bills 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.

Secondly, when you do take out a home loan then make all of your repayments on time every time. Don’t even be a day late! It’s hard for us to refinance your loan back to a major bank if your repayment history isn’t perfect.

If you can’t yet buy a home then begin accumulating genuine savings. This proves to the banks that you’re good with your money, can set a goal and can stick to it.

The goal is to show that the problems that happened are in the past and that you’re now a credit worthy borrower!

  • 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:

  • 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):

  • 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:

  • 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?

  • 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.