What Banks Look At When You Refinance (Bank Statements, Spending, Credit & More)

What Banks Look At When You Refinance – Bank Statements, Spending, Credit & More

Even if you already have a home loan, lenders still need to reassess your financial situation when you refinance. They’re checking that you can comfortably afford the new loan and that your recent financial behaviour supports your application.

This guide breaks down exactly what lenders review — and what you can do to strengthen your chances before applying.

1️⃣ Income: Stability Matters More Than Size

Lenders want to see consistent and reliable income. They usually assess:

PAYG income: Base salary, overtime, allowances and bonuses.
Casual/part-time income: Regularity over the last 3–6 months.
Self-employed income: Tax returns, BAS statements and business performance.
Rental income: Leases or agent statements.

If your income has fluctuated, a broker can help package your documents to present the strongest picture.

2️⃣ Living Expenses: The New Gold Standard

Lenders now scrutinise your spending more closely than ever. They will usually ask for:

3 months of transaction accounts showing everyday spending.
Your declared monthly budget for each expense category.
Comparison between declared vs actual spending.

Common red flags include:

Regular gambling transactions.
Large or irregular cash withdrawals.
High takeaway or discretionary spending.
Buy-now-pay-later (BNPL) usage.

Lenders don’t expect perfection — just evidence of control and consistency.

3️⃣ Credit History: Your Repayment Behaviour

Your credit report gives lenders a snapshot of how you’ve handled debt.

Repayment history: On-time or late payments over the past 24 months.
Credit limits: Not just the balance — the limit counts as potential debt.
Recent credit enquiries: Too many in a short time may raise concerns.
Defaults or judgements: Even small ones can impact approval.

If your report has issues, refinancing might still be possible — but a strategy is needed.

4️⃣ Other Debts & Liabilities

Lenders assess your total financial commitments, including:

Car loans and personal loans.
Credit cards (full limit is counted, even if the balance is low).
HECS/HELP debt.
BNPL services (Afterpay, Zip, Klarna, etc.).

Reducing credit limits or clearing smaller debts can sometimes boost your borrowing capacity instantly.

5️⃣ Your Property Value & Equity Position

Your property’s current value determines your loan-to-value ratio (LVR). This affects:

Your chance of approval.
Whether lenders mortgage insurance (LMI) applies.
Which lenders and products you’re eligible for.

Most lenders prefer an LVR of 80% or lower for refinances, but some will consider higher with the right conditions.

6️⃣ Employment & Financial Stability

Lenders also consider broader stability factors:

How long you’ve been in your current job.
Whether your income type is stable.
Your industry and employment history.
If you’re on probation (some lenders may decline).

Employment gaps or career transitions aren’t necessarily a deal-breaker — they just need proper explanation.

7️⃣ Conduct on Your Current Loan

This one is often overlooked. Lenders check how you’ve managed your existing loan.

Have your repayments been on time?
Are you frequently in arrears?
Any recent hardship arrangements?

A strong repayment history on your existing mortgage is a big plus.

8️⃣ How to Strengthen Your Refinance Application

A few simple tweaks can make a big difference:

Reduce unused credit limits (e.g., cards you no longer use).
Show consistent spending for 3 months pre-application.
Avoid BNPL usage in the lead-up to applying.
Pay bills on time to keep repayment history clean.
Organise documents early to speed up approval.

The goal is to present yourself as stable, organised and low-risk.

🔟 What Happens If You Don’t Tick Every Box?

Most people don’t have “perfect” finances — and that’s okay. A broker can:

Find lenders with flexible policies.
Explain how to improve your position in 30–90 days.
Package your documents in the strongest possible way.
Compare multiple lenders so you’re not relying on one policy.

Want a personalised refinance assessment?

Book a free home loan review with the Loan Location team. We’ll check your borrowing position and show you what you need to strengthen for the best approval outcome.