Refinance / Restructuring
What Lenders Look For In Refinancing
5 min read- Finance Guide
- Updated 2026
Quick answer
Lenders assess your
Borrowing Profile
Before approving a new refinance
- Serviceability Income vs expenses
- Property valuation Usually required
- Credit conduct Closely reviewed
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1300 421 044
Detailed explanation
Refinance approvals are driven by risk assessment. A lender usually wants to know whether the borrower can comfortably service the debt, whether the security property is acceptable, whether the proposed loan size fits policy, and whether the overall refinance improves or at least reasonably supports the borrower’s position.
Core parts of lender assessment
When assessing a refinance, lenders commonly review:
-
Current income and employment evidence
-
Living expenses and existing liabilities
-
Repayment history and credit conduct
-
Current property value and acceptable security type
-
Loan purpose, cash out reason and requested structure
-
LVR, usable equity and whether LMI applies
Serviceability, valuation and credit profile sit at the centre of most refinance decisions, but lenders also look at the practical benefit of the new loan and whether any requested cash out is acceptable.
What lenders usually want to see
Typical refinance requirements often include:
Stable and verifiable income- Reasonable living expenses
- Acceptable repayment history
- Enough equity for the requested loan
- A property they are comfortable taking as security
- A clear and acceptable loan purpose
- Supporting documents that match the application
Even strong borrowers can be declined if documents are inconsistent, the valuation is weak, expenses are high, or the requested refinance purpose falls outside policy
What makes lenders cautious
A borrower may already be managing their existing loan, but the new lender still applies its own credit rules. Lower borrowing power, a changed income position, new debts, a lower valuation or poor recent conduct can all create issues even where the current loan has been paid on time.
Serviceability buffer still matters APRA says banks apply a minimum serviceability buffer above the actual loan rate, so refinance applicants are tested at a higher assessment rate than the product they are applying for.
Main lender requirement areas
Lenders usually break refinance assessment into a few main areas rather than looking only at the interest rate
Common costs include:
Serviceability based on income, expenses and debts- Property valuation and acceptable security type
- Credit score and repayment history
- Loan to value ratio and whether LMI is needed
- Loan purpose, cash out reason and document quality
Lender note
Different lenders weigh these areas differently. A mainstream bank may focus heavily on clean servicing and standard security, while another lender may be more flexible on one point but stricter on another.
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Common problems
Refinance applications often struggle when one of the core credit pillars falls short, even if the borrower is mainly chasing a lower rate.
Serviceability is too tight
The lender may decide there is not enough surplus income once current debts, living costs and the assessment buffer are applied.
Possible solutions include:
- reduce unsecured debts where possible
- review declared living expenses carefully
- consider a smaller refinance amount
- check whether another lender policy is more suitable
This is one of the most common refinance barriers, especially where rates have risen or other debts have increased.
Valuation is lower than expected
If the valuation comes in below expectations, the LVR may be too high for the requested refinance or cash out.
Possible solutions include:
- reduce the requested loan amount
- contribute cash to lower the LVR
- remove or reduce equity release
- try a lender with stronger policy for the property type
Valuation risk matters because lenders base LVR and usable equity on their assessed value, not the borrower’s estimate.
Credit conduct or documents raise concerns
Missed payments, recent arrears, inconsistent application details or missing evidence can all create concern during assessment.
Possible solutions include:
- explain any credit issues clearly
- make sure all documents match the application
- wait for conduct to improve if needed
- use a lender whose policy better fits the scenario
Even small inconsistencies can slow or derail approval because refinance is still a full credit application.
Steps to get refinancing approved
Step
01
Review your current loan, repayment history and likely refinance purpose.
Step
02
Confirm income, expenses, liabilities and likely borrowing capacity.
Step
03
Estimate the property value and target loan to value ratio.
Step
04
Prepare clean supporting documents and submit the application.
Step
05
Complete valuation, credit assessment, approval and signing.
Step
06
Settle the refinance and move to the new loan structure.
Speak with a property refinance specialist.
The strongest refinance applications are usually the ones prepared around what lenders actually assess.
Income strength, serviceability, valuation, credit conduct, LVR and loan purpose all interact. A detailed review can show where the file is strong, where policy pressure may sit, and which lender category is most likely to fit before you apply.
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