Refinancing FAQ Australia

You may be able to refinance with bad credit, but lender choice narrows significantly and pricing will be higher. Mainstream lenders typically decline files with unpaid defaults, recent missed repayments or active arrears. Specialist or non-conforming lenders may still assess the file — usually at rates 1 to 3% above standard variable — depending on the severity, recency and type of credit issue. A default that is paid and more than 12 months old is generally treated more favourably than a recent unpaid one.

Refinancing triggers a hard credit enquiry from the incoming lender, which temporarily reduces your credit score by a small amount. This effect is generally short-lived if you continue meeting all repayments. The greater risk is applying to multiple lenders in quick succession — each application generates a separate enquiry, and a cluster of enquiries in a short period can signal financial stress to future lenders. To minimise the impact, compare lenders thoroughly before applying and avoid submitting multiple full applications at once. ASIC MoneySmart explains how credit scores are calculated and how to check your report for free.

Yes, self-employed borrowers can refinance, but the income documentation requirements are higher. Most lenders require the most recent two years of personal and business tax returns and notices of assessment. If income has been variable, some lenders average the two years rather than using the most recent figure alone. Low doc refinancing is available for self-employed borrowers who cannot supply full financials, though pricing and LVR limits are typically more conservative under that pathway. Lender assessment of self-employed files varies significantly — it is one of the areas where lender fit matters most.

No. Property Finance Help is not a lender, broker, credit provider or financial adviser. We provide general information and referral support only and may connect you with a suitable finance contact where appropriate. Any credit decision is made by the lender or broker you are connected with, not by Property Finance Help.

Standard refinance documents include government-issued ID, the most recent two payslips or income evidence, recent loan statements for all existing debts, three months of bank statements, the latest council rates notice and current property insurance details. Self-employed borrowers typically also need two years of personal and business tax returns and notices of assessment. Investment, commercial and complex files usually require additional documents including BAS statements, business financials, rental income evidence and a full liability schedule.

The most common source of delay is the outgoing lender's discharge processing — some lenders take 10 to 15 business days just to issue discharge authority. Based on enquiries received through this site, the outgoing lender is a more frequent cause of settlement delay than the incoming lender. Other frequent causes include valuation turnaround, missing or incomplete documents, credit questions raised during assessment, lender backlogs during busy periods and settlement coordination problems when the outgoing and incoming lenders need to act simultaneously. Complex borrower structures — trusts, companies, multiple applicants — also extend assessment times.

Yes, options often still exist after a refinance decline, but applying blindly to multiple lenders increases credit enquiries and can make the next application harder to approve. The right first step is to identify why the lender declined the application — whether it was income, LVR, credit conduct, property type or lender policy — then either address the issue before reapplying or match the scenario to a lender whose credit policy is a better fit for the file.

Total upfront refinancing costs for a standard owner-occupied home loan typically range from $800 to $2,500, excluding any fixed rate break costs. This usually covers a discharge fee from the outgoing lender ($150 to $400), a new application or annual package fee from the incoming lender ($0 to $600), a valuation fee ($0 to $400 — many lenders offer free valuations) and government mortgage registration and discharge fees which vary by state. The real test is whether the ongoing rate saving outweighs these costs within a payback period that most borrowers target at 12 to 24 months.

Yes, refinancing can reduce repayments if you secure a lower rate, extend the remaining loan term or both. Extending the term reduces monthly repayments but can increase total interest paid over the life of the loan — so the benefit of a lower monthly payment should be weighed against the long-term cost. Refinancing to the same remaining term at a lower rate delivers genuine cost reduction without extending the debt. Restructuring from principal-and-interest to interest-only will also reduce short-term repayments but pauses debt reduction entirely.

When a fixed rate period ends, the loan automatically rolls to the lender's revert variable rate unless you take action to refix, split, restructure or refinance. Many lenders' revert rates in Australia sit 0.5 to 1.5% above their advertised competitive variable rate offerings — meaning inaction after expiry costs more than acting before it. Reviewing your options 60 to 90 days before the fixed rate expires gives enough time to compare, apply and settle a new arrangement without lapsing onto the revert rate. The RBA's cash rate page provides context for understanding how rate movements affect fixed and variable pricing.

Fees when refinancing can include: a discharge fee from the outgoing lender ($150 to $400), a new application or annual package fee from the incoming lender ($0 to $600), a lender or third-party valuation fee ($0 to $400), a settlement or legal fee ($150 to $250) and government mortgage registration and discharge fees which vary by state. If you are leaving a fixed loan early, a fixed rate break cost applies separately and can range from nil to several thousand dollars depending on wholesale rate movements since you fixed.

Fixed rate break costs may be worth paying if the total refinancing benefit — the interest saving over the remaining loan life — clearly outweighs the cost. The break cost is calculated by your existing lender based on the difference between your contracted fixed rate and the current wholesale rate for the remaining fixed period. It can be nil if rates have risen since you fixed, or substantial if rates have fallen significantly. Always request the exact break cost figure in writing before making any decision, as the number changes daily with wholesale rate movements.

A revert rate is the variable rate your loan rolls to automatically when a fixed term expires. It is set by the lender and is often higher than their advertised competitive variable rate — sometimes significantly so. Because lenders are not required to proactively notify borrowers before the rollover, borrowers who miss the review window can remain on a higher revert rate for months or years without realising it. Checking the revert rate at the time of fixing — and calendaring a review 90 days before expiry — reduces this risk considerably. Rate movements are published by the Reserve Bank of Australia and directly influence how lenders set both fixed and revert pricing.

Yes, you may be able to refinance to release usable equity from your property. Most lenders allow equity release to 80% LVR without lenders mortgage insurance. For example, a property valued at $900,000 with an existing loan of $500,000 has total equity of $400,000, but usable equity to 80% LVR would be approximately $220,000 ($720,000 maximum loan less $500,000 existing loan). Equity release is still subject to full credit assessment — including income, credit conduct and loan purpose — and is not automatic regardless of how much equity exists on paper.

The amount of equity you can release depends on property value, existing loan balance, target LVR, income, credit conduct, loan purpose and lender policy. Most lenders cap standard equity release at 80% LVR. Borrowing above 80% LVR is possible but attracts lenders mortgage insurance. Not all equity on paper is accessible — usable equity is the amount that remains after the lender's LVR cap is applied to the current loan balance. Lender policy on loan purpose also matters: releasing equity for investment is typically assessed more conservatively than for renovation.

Yes, refinancing can roll higher-rate debts — credit cards, personal loans, car finance — into a mortgage. This usually reduces monthly repayments significantly because the debt is spread over a longer home loan term at a lower rate. The risk is that short-term debt stretched over 20 to 30 years can cost considerably more in total interest, even at a lower rate. ASIC's MoneySmart covers this trade-off directly and is worth reviewing before consolidating. Some lenders also assess debt consolidation requests more conservatively where the debts involved are large relative to income or where repayment conduct has been poor.

Yes, investment property refinancing follows the same general process as owner-occupied refinancing but lenders assess it differently. Rental income is typically shaded to 70 to 80% of gross for serviceability purposes, and investment loan rates are usually higher than owner-occupier rates. Refinancing can be used to access equity for further investment, restructure from interest-only to principal-and-interest, seek a better rate or move to a lender with more favourable investment lending policy. Lenders also apply tighter LVR limits and serviceability buffers to investment files than to owner-occupied ones.