Last updated: July 2026 · Reviewed by John Pierre Saliba, Director and Mortgage Broker, MFAA Accredited
Can I Refinance My Home Loan with Bad Credit?
Yes, but your options narrow. Lenders assess credit issues on a case-by-case basis. A default under $500 that is over 12 months old is treated very differently to a current default of $10,000.
Tier-1 banks typically require clean credit for 2+ years. Non-bank lenders may accept paid defaults after 12 months. Specialist lenders work with recent defaults but at higher rates, typically 1-2% above standard variable rates.
The strategy I use most often: refinance to a specialist lender now, clean up your credit, then refinance again to a competitive rate in 12-24 months. This two-step approach saves borrowers thousands over the long term because they are not stuck on penalty rates indefinitely.
- Tier-1 banks: Clean credit for 2+ years required
- Non-bank lenders: Paid defaults accepted after 12 months
- Specialist lenders: Recent defaults accepted, 1-2% rate premium
- Strategy: Specialist now, competitive rate in 12-24 months
Can I Refinance While on Maternity Leave?
Yes, several lenders will assess your application based on your return-to-work income rather than your current reduced income. You typically need a letter from your employer confirming your return date and salary.
Some lenders require you to be within 6 months of returning to work. Others will assess on the salary you will return to regardless of timeline. The key is knowing which lenders have favourable parental leave policies, and this is where working with a broker who knows lender policy inside out makes a real difference.
If you are on government-paid parental leave only (no employer top-up), fewer lenders will approve, but options still exist. If you have a partner on the application whose income covers the loan servicing independently, the parental leave becomes less of a factor.
Can I Refinance as Self-Employed with Only 1-2 Years of Financials?
Yes. Most major banks require 2 full years of tax returns and financials. However, several lenders accept 1 year of financials, and alt-doc or low-doc lenders can work with 6 months of BAS statements or business bank statements.
The rate premium for alt-doc is typically 0.5-1.0% above full-doc rates. If your business is growing, some lenders will use only the most recent year rather than averaging two years. This is a significant advantage for businesses that had a weaker first year but are now performing well.
- Full-doc (major banks): 2 years tax returns and financials required
- 1-year financials: Several lenders accept, competitive rates
- Alt-doc/low-doc: 6 months BAS or bank statements, 0.5-1.0% premium
- Growing business: Some lenders use most recent year only
Should I Refinance from a Fixed Rate to a Variable Rate?
It depends on your break cost. Fixed rate loans typically have break costs if you exit early, and these can range from a few hundred dollars to tens of thousands depending on the rate differential and remaining term.
Calculate the break cost against the annual savings from refinancing. If your fixed rate expires within 3-6 months, lock in a pre-approval now so you can switch immediately on expiry. If you have 1+ years remaining, the break cost calculation is critical.
For example, if your break cost is $8,000 but you save $6,000 per year by refinancing, the break cost is recovered in less than 16 months. If you plan to hold the loan for 3+ years, refinancing is still worthwhile despite the upfront cost. We calculate break costs before you commit to anything.
Can I Refinance to Access My Equity for Renovations?
Yes, this is called a cash-out refinance. Most lenders allow you to borrow up to 80% of your property's current value, and some up to 90% with LMI.
If your home is worth $1.2M and you owe $600K, you have $360K in accessible equity at 80% LVR. Homeowners in suburbs like Balmain and Mosman often have significant equity available. The funds can be used for renovations, and if the property is your home, the interest on the renovation portion is not tax-deductible. If it is an investment, the interest may be deductible.
We arrange valuations and structure the loan to maximise your available equity. In many cases, the renovation itself increases the property's value, improving your overall financial position. The key is getting an accurate valuation before you start, so you know exactly how much you can access.
Can I Refinance an Investment Property to Buy Another One?
Yes, and this is one of the most common strategies for portfolio growth. You release equity from property A to fund the deposit on property B.
The key is loan structuring: keep investment debt separate from personal debt for tax purposes. Cross-collateralisation (using both properties as security on one loan) is generally not recommended because it gives the bank control over both assets. If you need to sell one property, the bank can dictate terms on both.
We structure investment refinances with separate securities and split loans. This gives you maximum flexibility and ensures your tax deductions are clean. The equity release is set up as a separate loan split, clearly linked to the investment purpose, which your accountant will appreciate at tax time.
Can I Refinance After a Divorce or Separation?
Yes, but there are specific requirements. If both names are on the current loan, the remaining borrower needs to demonstrate they can service the full loan on their own income.
If there is a property settlement, the settlement order or binding financial agreement speeds the process. Some lenders have specific divorce or separation policies that are more flexible than standard assessments. Stamp duty exemptions may apply for transfers between separating spouses in NSW.
Common scenarios we handle include: one party buying out the other's share, selling a jointly owned investment to split proceeds, and consolidating debts that were accumulated jointly. The sooner you get advice on structuring, the smoother the process.
Is It Worth Refinancing for a 0.5% Rate Reduction?
On a $750,000 loan, a 0.5% rate reduction saves approximately $3,750 per year. On a $1.2M loan, that is $6,000 per year. Over 5 years, that is $18,750 to $30,000 in savings.
The cost to refinance (discharge fee, new lender application fee, settlement fee) is typically $500-$1,500 total. Some lenders offer cashback of $2,000-$4,000 that covers these costs entirely. In almost every case, refinancing for 0.5% or more is worth it.
Even smaller reductions can be worthwhile on large loans. On a $2M loan, a 0.25% reduction saves $5,000 per year. The maths almost always favours refinancing if you plan to stay with the new lender for at least 12 months. We run the numbers for you before you decide.
Can I Refinance If My Property Value Has Dropped?
Yes, but your options depend on your current LVR. If your property was worth $1M and you borrowed $800K (80% LVR), but it is now worth $900K, your LVR has risen to 89%.
You can still refinance, but you may need to pay LMI on the new loan, or find a lender with a profession-based LMI waiver. If you are a medical professional, lawyer, accountant, or senior executive, several lenders waive LMI up to 90% LVR, which solves the problem entirely.
In some cases, staying with your current lender and negotiating a rate reduction (a retention offer) is the better strategy. Banks will often reduce your rate by 0.3-0.5% to keep your business. We can negotiate this on your behalf, and if their offer is not competitive, we proceed with the refinance.
How Long Does Refinancing Take?
Typically 2-4 weeks from application to settlement. Simple refinances with strong documentation can settle in 10-14 business days. Complex scenarios (self-employed, multiple properties, trust structures) may take 4-6 weeks.
The most common delay is slow discharge from the existing lender, which can add 5-10 business days. We manage the entire process from application through to settlement, chasing up both lenders on your behalf.
- Simple PAYG refinance: 10-14 business days
- Standard refinance: 2-4 weeks
- Complex (self-employed, trusts): 4-6 weeks
- Common delay: Existing lender discharge, 5-10 business days
Most people refinance for a better rate. But the real savings often come from restructuring the loan itself. Switching from principal and interest to interest-only on an investment loan frees up cashflow. Splitting a loan between fixed and variable gives you rate certainty and flexibility. Setting up an offset account correctly can save more than the rate reduction alone. When you refinance through us, we do not just find a lower rate. We rebuild the loan structure from scratch.
