Getting a Home Loan With a Part 9 Debt Agreement
Owning your own home is a goal for most people in Australia. Obviously, Part 9 Debt Agreements cause issues with regard to obtaining finance to buy a home. In general, most people feel they can maintain debt agreement + home loan payments. Although, a question always asked is "how can I buy a house after a bankruptcy?"
Many lenders now offer finance options for people with debt agreements. However, even though legislation support that you can obtain finance. In brief, lenders want the debt agreement to be discharged before the loan or as part of the loan settlement.
We have previously provided funds for property purchases for people in DA. Important to realise is that in most cases, the government and lender purchase costs are higher than the clients' available funds. See below an example of a property purchase in Victoria.
Please note that all states in Australia have different Government Stamp duty costs. Most important is that stamp duty rates differ between first home buyers and if you have owned property previously.
See related stamp duty links and information on the Money Smart website.
Example of property purchase costs
|Description||First Home Buyer||Previous Property Owner|
|Total Purchase Cost||$551,501||$576,471|
|Purchase with an 85% Loan|
|Risk/ Mortgage Insurance + other estimated fees||$9983||$9983|
|Total Funds Required to Purchase at 85% LVR||$93,984||$118,954|
|Purchase with a 90% Loan|
|Risk/ Mortgage Insurance + other estimated fees||$11,427||$11,427|
|Total Funds Required to Purchase at 90% LVR||$67,928||$92,898|
As you can see; entry costs when buying a home are quite high. As a result, we find most clients need to postpone a purchase until sufficient funds are saved. Hence, in most cases, clients work to pay the debt agreement, plus save money for when the DA is completed.
As such, when the DA has come off your credit file; you may be in a better position for traditional lending. Consequently, not requiring bad credit home loans. Therefore, reducing the cost to purchase a property.
Otherwise, see here debt consolidation information to combine your part 9 debt agreement into your home loan; or obtain a bad credit car loan while keeping your debt agreement.