What you will need to refinance your home loan

Refinancing your home loan takes a lot of time and effort. If you want to avoid delays during the application process, you need to organise all the paperwork and documents you need beforehand. 

You might be wondering, ‘What documents do I need to refinance?’ To help you out, we’ve listed down common home loan refinance requirements. Keep the following in mind so you don’t miss anything important: 

Personal information 

First and foremost, you need to give the lender your personal ID to verify your identity. Examples of accepted personal identification include: 

• Driver’s licence 
• Passport 
• Birth certificate 
• Medicare card 

You must provide personal information such as your current address, your date of birth, and contact details. You’ll also be asked to detail your family situation, like relationship status and number of dependents, as this could affect your income and expenses. 

Proof of income and employment 

Lenders look at this to determine your ability to pay back the home loan refinance on time and in full. As a borrower, you need to prove that you can make regular repayments. The documents you need to provide could be one or a combination of the following: 

• Recent payslips that document your income 
• Your most recent Group Certificate 
• Your latest Tax Assessment Notice 
• A letter from your employer that confirms your salary 

You will also need to provide your employer’s and/or your accountant’s business details. This is to make certain that you have a stable job and can make regular repayments to your mortgage. 

If you're self-employed, the paperwork will be slightly different. When refinancing, your lender will likely request two years of business and personal tax returns and Australian Taxation Office assessments as proof of your income. 

List of expenses and other liabilities 

You'll likely need to supply your lender with documents outlining the last six months of debts and expenses. This includes the following: 

• Existing loans (e.g., home loans, personal loans, car loans, etc.) 
• Credit card debt 
• Buy-now-pay-later accounts 
• Copies of recurring bills 
• Bank statements 

Where possible, ensure you don’t fall behind on payments of any kind to strengthen your refinance application. Regular on-time payments show lenders that you have responsible spending habits, which may increase the likelihood of refinance approval. 

Current assets 

Lenders look at your current assets to better assess your financial position. By verifying your assets, lenders will determine the stability of your income and your creditworthiness as a borrower. A list of current assets includes: 

• Bank account balances 
• Investments (e.g., stocks and shares) 
• Vehicles (e.g., cars, motorcycles, boats) 
• High-end jewellery and art 
• Superannuation 
• Additional properties 
• Cryptocurrency 

These show lenders how much wealth you’ve accumulated over time. These assets could help you service your home loan. 

Current home loan information 

In addition to the typical home loan application requirements, borrowers who want to refinance need to provide information about their current mortgage. You would be expected to include the following: 

• Lender 
• Loan repayment type (i.e., interest only, principal and interest, or split) 
• Remaining loan balance 
• Principal loan amount 
• Repayment amount 
• Repayment frequency (i.e., monthly, fortnightly, weekly) 
• Interest rate 
• Interest rate type (i.e., fixed or variable) 

This information can help your potential new lender find the right loan refinance product for you. 

What are the refinance eligibility requirements? 

Different lenders will have different refinancing eligibility requirements, but typically, you’ll need to meet the following criteria:  

• Be an Australian resident or permanent resident  
• Have more than 20% equity in your home, which will also help you avoid Lenders Mortgage Insurance  
• Have a good or excellent credit score and history  
• Be employed and have proof of income  
• Be over 18 years old  

What are the benefits of refinancing your home loan? 

Here are just some of the many benefits of refinancing your home loan:  

• Lower monthly payments – You can get cheaper interest rates and lower your monthly repayments. This will save you potentially hundreds of dollars every month.   
• Shorten your loan term – Pay your loan off faster and own your home outright. This will also help you maximise your available equity.  
• Access equity – When you refinance your home, your lender may allow you to access some or all of your home’s equity. You can use this equity to buy an investment property, do renovations on your current property, or however you want.  
• Get a fixed interest rate – If you have a variable rate mortgage and you want to switch to a fixed-rate mortgage, then it can be a good idea to compare rates with other lenders, including the fixed rates your current lender may be able to offer you. See if you can get a lower fixed rate before your interest rate adjustment period.  
• Debt consolidation – This refers to combining multiple high-interest debts like credit cards, car loans, or personal loans into one lower-rate debt—your home loan. Doing so could help reduce monthly payments.  
• Get better loan features – When you refinance, you can ask your lender about redraw facilities and offset sub-accounts that may be available. These features can help you save more on your payments.  

Refinancing your home loan has great advantages but also comes with a few drawbacks. Before making a decision, consider your options carefully to get the most successful results.  

Ready to refinance?  

Gather your credit history, existing loan details, and documents regarding your regular income to present to your lender. With just a few documents, you'll be on track to getting your refinance approved. 

For more information on refinancing home loans, get in touch with our friendly lending specialists here at loans.com.au! 

Disclaimer: The information provided in this article is general in nature and does not constitute financial or legal advice. Please seek independent professional advice tailored to your personal circumstances before making any financial decisions.

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