Can we get a home loan after bankruptcy?

Any general questions you might have in regards to loans and finance.
moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Can we get a home loan after bankruptcy?

Postby moodyjack » Mon Nov 24, 2014 10:09 am

Hi home loan experts!

My wife and I had to become insolvent primarily as a result of illness on my part. We could also not be able to get a tenant for our home at the same time, and there were multiple factors in play. Her bankruptcy finishes next May while I am already discharged from bankruptcy. So I was wondering if lenders exist that we can borrow from. Could someone give us any idea if we would be able to apply for a home loan?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can we get a home loan after bankruptcy?

Postby Otto Dargan » Mon Nov 24, 2014 11:10 am

Hi and welcome to the forums moodyjack.

There are lenders who may be willing to give out a home loan to people with discharged bankruptcy. Could you tell me a bit more about your situation? Like what kind of a purchase price are you going for and other relevant details.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Can we get a home loan after bankruptcy?

Postby moodyjack » Mon Nov 24, 2014 12:11 pm

We are looking to purchase a property in the range of $500,000 - $550,000. We would have about $60 - $70K by the time my wife’s bankruptcy finishes in May. We're both permanent full time teachers.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can we get a home loan after bankruptcy?

Postby Otto Dargan » Mon Nov 24, 2014 1:12 pm

Hi moodyjack,

Well, for a $500,000 purchase price, you would need to have in total $86,000 as 'total out of pocket expenses'. This is to cover the minimum deposit and all associated costs. You should bear in mind that the lenders we deal with for cases of discharged bankruptcies do not have the most attractive rates, they take on this business as a risk and therefore charge a higher interest rate which is unfortunate. Right now the best rate for this particular case would be 7.65%.

You need not worry much about it, though. The idea is not to stay with these lenders forever, you only use them to get into the property market
Once you satisfy the policy for a major or even non-major bank then you refinance. So basically when the equity goes up then you switch to another lender. In two years you could approach a well known lender with low rates and low fees, i.e. two years from May when the bankruptcy of your wife is over.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

moodyjack
Posts: 47
Joined: Wed Jun 17, 2009 4:36 pm

Re: Can we get a home loan after bankruptcy?

Postby moodyjack » Mon Nov 24, 2014 1:45 pm

So we would need $86,000 for the loan and we will likely pay interest at 7.65%. Maybe if we can to get another 14,000 then we'd have the 20% to go with a major bank anyway. Wouldn’t that enable us to get a much lower interest rate?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can we get a home loan after bankruptcy?

Postby Otto Dargan » Mon Nov 24, 2014 2:34 pm

Hi moodyjack,

Unfortunately, you wouldn't qualify for a competitive rate with a major lender. As discharged bankrupts, you will most probably get knocked back. You need to be discharged for at least two years to have a worthwhile shot at it. In addition, you need to consider the fees. It wouldn't be just a straight 20% but would include other associated fees as well.

The figure that I arrived at ($86,000) included a 10% deposit plus associated costs. On the assumption that you are seeking to buy an established property, the government costs would be around $24,000 and the set up costs with the lender would be $1,835. On top of that, you may need to pay about $1,500 for conveyancing costs and the lenders mortgage insurance (LMI) would amount to about $8,600.

If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
captainjacksparrow
Posts: 37
Joined: Fri Jul 19, 2013 2:45 am

Re: Can we get a home loan after bankruptcy?

Postby captainjacksparrow » Mon Feb 16, 2015 11:10 am

Hi everyone, could someone provide me an estimate of how much LMI I would be required to pay? I am seeking to buy a house worth $800,000 and I have about $100,000 for the deposit.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Can we get a home loan after bankruptcy?

Postby Otto Dargan » Mon Feb 16, 2015 12:56 pm

Hi captainjacksparrow,

According to the LMI rates table of one of our lenders, ou may need to pay $10,829 for a loan of $700,000 for a property worth $800,000.

You can use the LMI Calculator to get a better estimate of your LMI premium. It asks you to input various factors related to your loan application and compares the LMI premiums and the interest rate on your loan with five different lenders.

You are required to pay LMI if the Loan to Value Ratio (LVR) is more than 80%, or 60% in case of low doc loans.Generally, the higher the Loan to Value Ratio (LVR) and the loan amount, the higher will be the required LMI premium.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


Return to “Home Loan Forum”

Who is online

Users browsing this forum: No registered users and 2 guests