How to Get Your Refinance Application Approved

Getting a refinance application approved involves meeting your lender's current serviceability criteria and demonstrating that switching loans makes financial sense.

Your lender treats this like a new loan application, which means they'll assess your current income, expenses, and employment situation from scratch. They're not interested in what you qualified for three years ago when you got your original mortgage. They want to know what you can service right now, today, based on their current assessment rates and buffers.

How Lenders Assess Your Refinance Application

Lenders calculate your borrowing capacity by adding a buffer of around 3% on top of the current interest rate, then testing whether you can still afford the repayments. Your income gets verified through tax returns, ABN registration, bank statements, and potentially BAS statements depending on your structure. They'll scrutinise your bank statements for the past three months looking at consistent income patterns and regular expenses.

In our experience working with brickies, irregular income patterns from seasonal work or project-based contracts can trigger questions from lenders. If you had a strong March quarter but a quiet June, they'll want to understand why. If you're self-employed as a bricklayer, most lenders will average your income across the last two financial years of tax returns.

Your current loan performance matters. If you've had multiple missed payments or your mortgage is in arrears, approval becomes difficult. Lenders also check your credit file for defaults, court judgements, or recent credit applications that might suggest financial stress.

Property Valuation and Loan-to-Value Ratio

The lender will order a property valuation to determine your current equity position. They need to confirm your loan amount sits within their acceptable loan-to-value ratio, typically 80% to avoid lenders mortgage insurance.

Consider a bricklayer who bought a property in the western suburbs five years ago for $520,000 with a $416,000 mortgage. The property's now valued at $680,000, and the loan balance sits at $390,000. That puts the loan-to-value ratio at 57%, giving significant equity buffer. This scenario makes refinancing straightforward from a valuation perspective.

If your property value has dropped or stagnated, you might find yourself with insufficient equity to refinance without paying lenders mortgage insurance. Some lenders will use an automated valuation model rather than sending a physical valuer, which can work against you in suburbs where recent comparable sales data is limited.

Income Documentation for Bricklayers

Most brickies work as sole traders or through a company structure. Sole traders need to provide two years of tax returns plus recent bank statements showing income deposits. If you're using a company structure, lenders will want company tax returns, your personal tax returns, and potentially financial statements prepared by your accountant.

Bank statement loans exist as an alternative if your tax returns don't reflect your actual income due to legitimate deductions. These loans assess your income based on deposits flowing into your business account over 6 to 12 months. The trade-off is you'll typically pay a higher interest rate, often 0.2% to 0.5% above standard rates.

You can't hide liabilities from lenders during a refinance. They'll see your ute loan, credit cards, Afterpay, and any other finance commitments when they pull your credit file. These commitments reduce your borrowing capacity because lenders factor them into your expense calculations.

The Timeline from Application to Settlement

Refinance applications typically take three to six weeks from submission to settlement, assuming no complications. The lender needs time to assess your application, order valuations, prepare loan documents, and coordinate with your existing lender for discharge.

You'll need to factor in discharge fees from your current lender, typically between $300 and $500. Some lenders charge deferred establishment fees if you refinance within the first few years. If you're coming off a fixed rate period, check whether break costs apply. These can run into thousands of dollars if you exit mid-term while rates are lower than when you locked in.

The application itself requires gathering payslips or tax returns, bank statements, photo identification, rates notices, and your current loan statements. Missing documents slow everything down. Get your paperwork together before you start rather than scrambling for statements mid-process.

When Your Application Gets Declined

Declines happen for specific reasons, not random ones. Your debt-to-income ratio might exceed the lender's maximum threshold, typically around 6 times your gross annual income. Your expenses might be too high relative to your income. Your employment situation might not meet their stability requirements.

If one lender declines your application, that doesn't mean all lenders will. Different lenders have different appetites for self-employed borrowers, different ways of calculating income for tradies, and different serviceability buffers. A broker who understands how construction industry income gets assessed can often find an alternative lender who'll approve what another declined.

Sometimes the issue isn't your financial position but the timing. If you've recently changed business structures, lenders might want you to demonstrate 12 months of trading history in the new structure. If you've taken on a new car loan or expanded your tool fleet on finance, that might tip your serviceability over the edge temporarily.

Accessing Equity When You Refinance

Refinancing lets you access equity in your property by increasing your loan amount while switching lenders. If you want to release equity to fund an investment property or buy equipment for your business, this gets assessed as part of your overall refinance application.

Lenders will lend up to 80% of your property value without requiring lenders mortgage insurance. Using the earlier scenario of the $680,000 property, that means a maximum loan of $544,000. With a current balance of $390,000, you could potentially access $154,000 in equity. The lender still needs to be satisfied you can service the higher loan amount at their assessment rate.

Cash-out refinancing for business purposes or investment gets treated differently than refinancing to consolidate consumer debt. Lenders look more favourably on equity used for income-producing purposes. If you're pulling out $80,000 to buy your next investment property, that's backed by an asset. If you're pulling out $80,000 to clear credit cards and personal loans, lenders see that as higher risk.

Call one of our team or book an appointment at a time that works for you. We'll run through your current position, check your serviceability, and work out which lenders will actually approve your application before you waste time on paperwork.

Frequently Asked Questions