What lenders check when you apply to refinance
Lenders assess your current income, living expenses, and whether the property still supports the loan amount you're requesting. They'll also run a credit check and confirm that you've been making repayments on time. The approval process for refinancing is similar to taking out a new loan, but lenders also consider how your financial situation has changed since you first borrowed.
Consider a homeowner in Morley who purchased a few years ago and now wants to refinance to a lower rate. Their income has increased, but so have their living expenses due to childcare costs. The lender will look at current pay slips, bank statements showing regular expenses, and whether the valuation on the property still covers the loan amount being requested. If the equity position looks sound and serviceability calculations pass, the application moves forward.
Lenders typically request three months of bank statements, recent pay slips or tax returns if you're self-employed, and a copy of your current loan statement. They're checking whether you can comfortably service the new loan at a higher assessment rate than the actual rate you'll be paying. That assessment rate acts as a buffer in case rates rise after settlement.
Property valuation and equity position
Your property needs to be worth enough to support the loan amount and meet the lender's loan-to-value ratio requirements. If the valuation comes in lower than expected, you may need to reduce the loan amount or provide additional funds to meet the lender's criteria. Most lenders will order a valuation as part of the approval process, and the outcome directly affects whether your application proceeds.
Morley has seen varied property performance depending on the street and proximity to Morley Galleria or the light rail extension works. A valuation on a renovated home near Walter Road might come in stronger than a comparable property further from transport links. If you purchased during a peak and values have softened, the valuer's assessment may not reflect what you paid, and that can affect how much you're able to borrow.
Some lenders offer desktop valuations or automated valuation models for lower-risk refinances, which can speed up the process. If the property has been recently renovated or extended, mention it upfront so the valuer is aware and considers the improvements in their assessment.
Income verification and employment status
Lenders want to see stable income that can service the loan over the long term. If you're a PAYG employee, recent pay slips and employer confirmation are usually enough. If you're self-employed or working casually, expect to provide tax returns, business financials, and sometimes a letter from your accountant confirming ongoing income.
In our experience, applicants who've recently changed jobs or moved from full-time to contract work face more questions during the approval process. Lenders prefer to see at least three months in a new role for PAYG employees, and ideally two years of consistent income for self-employed borrowers. If your circumstances have changed, speak with a mortgage broker in Morley who can match you with lenders more comfortable with your situation.
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Credit file and repayment history
Lenders will pull your credit file to check for defaults, late payments, or multiple recent credit applications. A clean repayment history on your current mortgage strengthens your application, while missed payments or unpaid debts create delays or lead to decline.
If you've had a credit issue in the past, it doesn't automatically disqualify you, but you'll need to explain the circumstances and show that your situation has improved. Some lenders are more lenient than others, particularly if the issue was isolated and resolved quickly. Running a loan health check before applying gives you a chance to address any concerns before they reach a formal assessment.
Avoid applying for new credit cards or car loans in the months leading up to your refinance application. Each application leaves a footprint on your credit file, and too many in a short period can raise questions about your financial stability.
How long does refinance approval take
Most refinance applications are assessed within a week, though timeframes vary depending on how quickly you provide documents and whether the lender needs to request additional information. Straightforward applications with clear income, strong equity, and a clean credit file often receive conditional approval within a few days. More complex scenarios involving self-employment, multiple properties, or recent credit events can take longer.
Once conditional approval is issued, the lender will order a valuation if they haven't already. After the valuation is completed and any remaining conditions are cleared, formal approval follows. From application to settlement, expect around four to six weeks in total, though this can stretch if there are delays with the valuer or if you're slow to provide requested documents.
If you're coming off a fixed rate and want to avoid rolling onto a higher variable rate, start the refinance process at least eight weeks before your fixed term ends. That gives you time to compare options, submit your application, and settle before the rate reverts.
What can delay or block your refinance approval
The most common issues are a lower-than-expected valuation, a change in income or employment, or undisclosed debts that appear on your credit file. Lenders also decline applications if your living expenses are unusually high or if recent bank statements show irregular deposits or frequent overdrafts.
As an example, a couple refinancing in Morley applied with a strong income and clean credit, but their bank statements showed regular transfers to an overseas account. The lender queried whether these were gifts or loan repayments. After the couple explained the transfers were supporting family overseas and provided proof of ongoing income, the lender accepted the explanation and approved the loan. Transparency during the application avoids these hold-ups.
If you're consolidating personal debt into your mortgage or accessing equity for another purpose, the lender will ask what the funds are for. They're checking whether the purpose is acceptable under their policy and whether the additional borrowing still fits within serviceability limits.
Preparing your application to avoid delays
Gather your documents before you apply, including recent pay slips, bank statements, your current loan statement, and proof of any other income or assets. If you're self-employed, have your last two years of tax returns and financial statements ready. The faster you provide what the lender needs, the sooner your application is assessed.
Check your credit file before applying so you know what the lender will see. If there are errors, dispute them with the credit bureau before proceeding. If there are legitimate issues, be ready to explain them upfront rather than waiting for the lender to ask.
Call one of our team or book an appointment at a time that works for you. We'll review your situation, confirm what documents you'll need, and match you with lenders who are likely to approve your refinance based on your circumstances.
Frequently Asked Questions
What do lenders check during a refinance application?
Lenders assess your current income, living expenses, credit file, and repayment history. They also order a property valuation to confirm the property supports the loan amount and check that you can service the new loan at a higher assessment rate.
How long does refinance approval take in Morley?
Most refinance applications are assessed within a week, with straightforward cases receiving conditional approval in a few days. From application to settlement, expect around four to six weeks in total, depending on how quickly documents are provided and the valuation is completed.
What can delay my refinance approval?
Common delays include a lower-than-expected property valuation, changes in income or employment, undisclosed debts on your credit file, or high living expenses. Providing incomplete documents or late responses to lender requests also slows the process.
Do I need a property valuation to refinance?
Yes, most lenders order a valuation to confirm the property supports the loan amount and meets their loan-to-value ratio requirements. Some lenders use desktop valuations for lower-risk refinances, which can speed up the process.
Can I refinance if I've recently changed jobs?
Yes, but lenders prefer to see at least three months in a new role for PAYG employees. If you've moved to contract or self-employed work, expect to provide more documentation and potentially face stricter income verification requirements.
