Thinking of refinancing your home loan? Whether you're chasing a lower rate, freeing up equity, or consolidating debts, refinancing can be a powerful way to reshape your financial position. But before lenders say “yes,” they’ll need to assess whether you meet their eligibility requirements.
Here’s a breakdown of the key factors lenders evaluate when you apply to refinance in Australia.
1. Income and Employment Status
Lenders want to know that you have a stable income and that it’s sufficient to support your refinanced loan. Your employment type (full-time, part-time, contract, or self-employed) will determine what documents are required.
What lenders will check:
- Your total gross income (including bonuses or rental income if applicable)
- How long you’ve been in your current job or business
- Whether your employment is stable and ongoing
- Recent payslips, tax returns, or financials (depending on employment type)
If you’re self-employed, you may need to provide business tax returns and profit & loss statements over the last 1–2 financial years.
2. Debts and Monthly Living Expenses
Lenders look at the full picture—not just what you earn, but how much of it is already committed.
They’ll assess:
- Existing loan repayments (home, car, personal)
- Credit card limits and outstanding balances
- Day-to-day expenses like groceries, utilities, childcare, subscriptions, insurance, and transport
This helps them determine if you can comfortably meet the new loan repayments without financial strain.
3. Property Value and Loan-to-Value Ratio (LVR)
Your property’s current market value and the size of your new loan will determine your Loan-to-Value Ratio (LVR)—a key figure in refinancing.
Here’s how it works:
- Lenders usually arrange a valuation to confirm the property's worth
- If your LVR is 80% or lower, you’re more likely to avoid Lenders Mortgage Insurance (LMI)
- The more equity you hold in your home, the stronger your position when refinancing
If you’re using equity for investment or renovations, lenders will also consider how this impacts your financial stability.
4. Credit History and Repayment Behaviour
Your credit report gives lenders insight into how you’ve managed money in the past.
They’ll look at:
- Your repayment track record on your current home loan and other debts
- Whether you’ve had any missed payments, defaults, or bankruptcies
- Recent credit enquiries or new loan applications
- Your overall credit score and how much credit you’ve used versus what’s available
A strong, consistent repayment history makes your application more attractive.
5. Purpose of the Refinance
The reason behind your refinance plays a part too. Common reasons include:
- Securing a more competitive interest rate
- Accessing equity to invest or renovate
- Switching lenders or loan types
- Consolidating multiple debts into one
Lenders want to ensure the refinance genuinely benefits your situation and aligns with your long-term financial goals.
Final Thoughts
Refinancing your home loan is a great opportunity to improve your financial wellbeing—but every lender has slightly different criteria when it comes to approval.
With access to over 40 lenders, we can help you:
- Assess your eligibility upfront
- Gather the right documentation
- Compare loan options tailored to your needs
- Avoid unnecessary delays or declined applications
Want to know if you qualify? Let’s find out together.
Book a free 15-minute strategy call today and explore what refinancing could mean for you.
