Refinancing Approval: The Steps and What to Expect

Getting approval to refinance your home loan isn't the same as getting approval for your first purchase. The assessment is different, the documents required shift depending on your employment type, and the property you're refinancing is often valued differently than you'd expect.

The refinancing approval process starts with a formal application to a new lender, who reassesses your financial position, verifies your income and expenses, and arranges a property valuation before deciding whether to approve your loan.

Why Lenders Reassess You Fully When You Refinance

Even if you've been paying your current loan without issue for years, a new lender still assesses you as if you're applying for the first time. They want to confirm that your income, employment, and expenses support the loan amount you're requesting. Lenders also assess your property's current value, which may have changed since you bought it. If the valuation comes in lower than expected, it can affect your loan-to-value ratio and limit your options.

Consider a borrower in Doncaster who purchased five years ago and now wants to refinance to a lower rate. Their property has increased in value, their loan balance has dropped, and their income has improved. The new lender still runs a full credit check, requests recent payslips, and orders a desktop valuation. The valuation comes back $80,000 higher than the purchase price, which allows the borrower to avoid lender's mortgage insurance and access an offset account that wasn't available on their original loan.

Documents You'll Need to Submit

Your lender will ask for proof of income, identification, and details about your current loan. If you're a PAYG employee, that typically means recent payslips and a notice of assessment from the tax office. If you're self-employed, you'll need financial statements and two years of tax returns. Lenders also want to see a copy of your current loan statement, your council rates notice, and proof of your address.

Expenses are assessed carefully. The lender reviews your bank statements and looks at how much you're spending each month on living costs, other debts, and any financial commitments like private school fees or childcare. They apply what's called a Household Expenditure Measure benchmark if your declared expenses seem unusually low, which means you can't understate your spending to inflate your borrowing capacity.

How the Property Valuation Affects Your Application

The valuation is ordered by your new lender, usually through a desktop review or a short site inspection. The lender doesn't use your Doncaster property's council valuation or your estimate. They rely on recent sales of similar properties in your suburb and the condition of your home. If you've renovated or maintained the property well, the valuation is more likely to reflect that. If the property is dated or in poor condition, the valuation might fall short.

In Doncaster, where property types vary widely from older brick homes near Doncaster Secondary College through to renovated family houses closer to The Pines, the valuation method matters. A desktop valuation might rely on older sales data and miss the impact of your kitchen renovation, while a short physical inspection gives the valuer a chance to see the improvements firsthand. If the valuation comes in lower than you need, you can request a review or provide evidence of recent comparable sales, but you can't simply disagree with the result.

What Happens Between Application and Approval

Once you submit your application, the lender's credit team reviews everything. They check your credit file, verify your employment, and assess your debts. If you're on probation, they may decline the loan or request additional documentation from your employer. If you have unpaid defaults or court judgments, they may ask for an explanation or request that you clear them before they'll proceed.

You'll usually hear back within a few days to a week, depending on how busy the lender is and whether they need to clarify anything. Conditional approval means the lender is willing to proceed, but you need to meet certain conditions like providing a final payslip, clearing a debt, or accepting the property valuation. Once those conditions are satisfied, you move to formal approval, and the lender books a settlement date.

When Your Fixed Rate Period Is Ending

If your fixed rate is expiring, the approval process needs to be completed before you roll onto a higher variable rate. Many borrowers in Doncaster who fixed their loans two or three years ago are now facing revert rates that are significantly higher than what's available on the market. Starting the approval process at least eight weeks before your fixed term ends gives you time to submit documents, respond to lender queries, and settle on the new loan without rushing.

In our experience, borrowers who leave it too late often end up paying their old lender's revert rate for one or two months while the new loan is still being processed. That can cost hundreds of dollars in avoidable interest.

How Existing Debts Influence Your Approval

If you're carrying personal loans, car finance, or credit card balances, those commitments reduce how much you can borrow or whether the lender will approve you at all. Some lenders let you roll those debts into your new mortgage as part of the refinancing process, which can simplify your repayments and lower your overall monthly outgoings. Other lenders prefer that you pay down or close certain accounts before they'll approve your application.

Your credit card limits matter just as much as your actual balances. A lender assumes you could max out your card at any time, so even if you only owe $500 on a $15,000 limit, they assess your ability to service the full $15,000. Closing unused cards or reducing limits before you apply can improve your approval outcome.

What Happens If Your Application Is Declined

If a lender declines your application, they'll tell you why. It might be because your expenses are too high relative to your income, the valuation came in too low, or you didn't meet their credit policy. A decline from one lender doesn't mean you can't refinance. Different lenders have different policies, especially around self-employment, rental income, and investment properties. A broker can help you identify which lenders are more likely to approve your situation and avoid multiple applications that leave unnecessary marks on your credit file.

Refinancing approval takes time, but the outcome is worth preparing for properly. If you're in Doncaster and your current loan no longer fits your circumstances, call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions