Refinancing approval depends on meeting current lending criteria, which may differ substantially from the standards that applied when you first borrowed.
Lenders assess your application as though you were a new borrower, evaluating income, expenses, equity, and serviceability under today's rules. If your income has fluctuated, your expenses have changed, or you've taken on additional debt since your original approval, those factors will influence whether a new lender accepts your application. The property valuation also matters. If your home's value has not kept pace with your loan balance, you may no longer meet the required loan-to-value ratio for a standard refinance product.
What Lenders Review During a Refinance Application
Lenders examine your income stability, living expenses, existing debts, credit history, and the equity position in your property.
Consider a borrower in Norwood who purchased a few years ago on a two-year fixed term. Their original loan was approved with a single income and modest living costs. Since then, they've added a car loan, their childcare expenses have increased, and one partner has reduced their working hours. When their fixed period ended, they applied to refinance to a lower rate with a different lender. The new lender's serviceability assessment factored in the higher childcare costs and reduced income, which brought them close to the serviceability threshold. The lender requested recent payslips, bank statements covering three months, and a breakdown of recurring expenses. Once the numbers were verified and the valuation confirmed sufficient equity, the application was approved, though the borrower's maximum loan amount was lower than expected.
Income verification typically requires recent payslips if you're an employee, or tax returns and business financials if you're self-employed. Lenders also review bank statements to confirm your declared living expenses and identify any undisclosed debts or irregular spending patterns. Credit checks reveal missed payments, defaults, or recent credit enquiries, all of which can influence the outcome.
How Equity Affects Your Refinancing Options
Your equity position determines which products are available and whether lenders mortgage insurance applies.
Equity is calculated as the difference between your property's current market value and your outstanding loan balance. If you're sitting on 20 percent equity or more, you'll access standard refinance products without additional insurance costs. Below that threshold, some lenders will still approve your application but will add lenders mortgage insurance to the loan, increasing your overall cost. If your equity has grown since you first bought, you may also be able to access equity for investment purposes or to consolidate other debts into your mortgage, subject to serviceability.
In suburbs like Unley or Prospect, where property values have risen steadily, many homeowners find their equity position has improved without additional repayments. This can open up opportunities to switch lenders, negotiate better terms, or restructure your loan to include features like offset accounts or redraw facilities that weren't part of your original product.
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When Timing Influences Approval Outcomes
Applying at the right moment in your financial calendar can improve your chances of approval.
If you've recently changed jobs, most lenders prefer to see at least three to six months of consistent income in your new role before they'll assess your application. Similarly, if you've just completed a tax return that shows lower income than previous years, waiting until your next financial year may produce a stronger application. For borrowers coming off a fixed term, starting the refinance process two to three months before expiry allows time to address any issues that arise during assessment without being forced onto a higher revert rate in the interim.
How the Valuation Process Works
Lenders arrange a valuation to confirm your property's current market value, which directly affects your loan-to-value ratio.
Most refinance valuations are conducted as desktop assessments, where the valuer reviews recent sales data for comparable properties in your area without inspecting your home. In some cases, particularly for higher loan amounts or properties in areas with limited sales data, the lender will order a physical inspection. The valuation determines whether you meet the equity requirements for the product you've applied for. If the valuation comes in lower than expected, you may need to reduce your loan amount, provide additional funds, or accept a product with lenders mortgage insurance.
For properties in Adelaide's inner suburbs like Norwood, Unley, or Prospect, desktop valuations are common due to the volume of comparable sales. In contrast, properties in less active markets or those with unique features may require a full inspection, which can add a week or more to the approval timeline.
What Happens If Your Application Is Declined
A declined refinance application doesn't mean you're out of options, but it does require a clear understanding of why the lender said no.
Common reasons for decline include insufficient serviceability, inadequate equity, undisclosed debts, or adverse credit events. If your application is declined, the lender should provide a reason. From there, you can address the specific issue or explore alternative lenders with different assessment criteria. Some lenders are more accommodating of self-employed borrowers, others have higher tolerance for recent credit enquiries, and some specialise in scenarios where equity is tight. Working through a loan health check with a broker allows you to identify which lenders are likely to approve your application before you formally apply, which protects your credit file from multiple enquiries.
How Long Approval Takes and What Delays It
Most refinance applications are assessed within five to ten business days, though this can extend if documentation is incomplete or the valuation is delayed.
Delays typically occur when payslips are missing, bank statements don't cover the required period, or the lender requests additional information to verify your income or expenses. Self-employed borrowers often face longer timelines because lenders require full financial statements and tax returns, which may need to be prepared or updated. Once the lender has everything they need, formal approval is usually issued within a few days, followed by settlement within two to four weeks depending on the complexity of your loan structure and whether you're consolidating other debts.
Refinancing doesn't require the same urgency as a property purchase, but starting early gives you room to resolve any issues without being forced to accept unfavourable terms. If your fixed rate period is ending, beginning the process well before expiry ensures you're not caught on a higher revert rate while waiting for settlement.
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Frequently Asked Questions
What do lenders assess during a refinance application?
Lenders assess your income stability, living expenses, existing debts, credit history, and the equity in your property. They treat your refinance application as though you were a new borrower, applying current lending criteria and serviceability rules.
How does equity affect my refinancing options?
Equity determines which products are available and whether lenders mortgage insurance applies. If you have 20 percent equity or more, you'll access standard products without additional insurance costs.
How long does refinance approval take?
Most refinance applications are assessed within five to ten business days, though this can extend if documentation is incomplete or the valuation is delayed. Settlement typically occurs within two to four weeks after formal approval.
What happens if my refinance application is declined?
A declined application requires understanding the specific reason, which may include insufficient serviceability, inadequate equity, or adverse credit events. You can address the issue or explore alternative lenders with different assessment criteria.
When is the optimal time to apply for refinancing?
Applying two to three months before your fixed rate expiry gives you time to address any issues without being forced onto a higher revert rate. If you've recently changed jobs, waiting three to six months in your new role can strengthen your application.
