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Why won't the bank let me refinance?
Bayley Clarke · Mortgage broker on the road · Last checked 11 November 2026 · 8 min read
The short answer
Because a refinance is a brand new application. The new bank has never met you, so your perfect record with the old one barely registers.
It reruns your income, debts and spending at today's numbers, adds a buffer on top of the rate, and reads the value and your credit file fresh. Most knock-backs come down to one of six walls: the buffer, the value, the credit file, past hardship, changed income, or starting at a specialist lender. Name the wall and there's usually a way around it, even if that way is repricing where you are.
A perfect repayment record isn't the test
This is the one that stings. Five years of repayments, never a day late, and the new bank says no. A refinance isn't a transfer. It's a brand new application, and the new bank has never met you, so it goes back to the drawing board on income, debts, living costs, the valuation and your credit file, all at today's numbers.
The question it's answering isn't "does this person pay their loan". It's "would we lend this person this amount today, from scratch". Plenty of people pass the first and fail the second for reasons that have nothing to do with how they've behaved. Below are the six walls I see people hit, and what gets you over or around each one.
The servicing wall: rates, buffers and the reduced-buffer path
The most common wall by a mile. The new lender tests you at your rate plus a buffer, generally around three percentage points, to prove you could still carry the loan if rates kept climbing. Rates went up, living costs went up, and a loan that sailed through when you bought can fail on paper now without a single thing changing in your life.
The escape hatch is the reduced-buffer refinance. Several lenders, including some of the majors, will assess a straight swap of your existing debt at around one point instead of three, providing you tick their gates: clean repayments, a loan open at least 12 months, no increase in the amount, and almost always a loan at or under 80% of value. One major pulled its version in mid 2026. So "that bank won't" is often followed by "this one will".
Told you can't switch?
Book a call and I'll tell you which wall you're hitting. I run your numbers at both buffers and tell you which lenders have a path you actually fit.
No application, no credit check, nothing on your file. Just the numbers.
Value dropped: LVR over 80
Your loan to value ratio is the loan divided by what the place is worth today, and the value side moves without asking you. You can still refinance above 80%, but lenders mortgage insurance may be charged again on the new loan, even if you paid it once already, and pricing above 80% is often higher. Stack those and the saving can turn into a cost. Nearly every reduced-buffer path stops at 80% too.
Own more than one property? If the loans are tied together, a fresh valuation on the one you want to move can push the ones staying behind over 80%. Fixable, but it has to be worked out before anything gets lodged.
Credit file and past hardship
Lenders read the file under the score. A low number with no missed repayments and no defaults will often still refinance. Missed card or home loan repayments are a different conversation, and the sharpest refinance paths carry their own credit tests. As for applying wrecking your score: a refinance enquiry is one line saying you applied for a home loan. Banks read it as housekeeping.
Hardship information sits on your credit report for 12 months, and lenders set their own look-back on top. Some will consider you three months after the arrangement ended, some want six, plenty want 12 months of clean repayments, and at least one wants two years. A hardship arrangement a couple of years back generally isn't a wall on its own. Which lender you go to matters.
Income changed: leave, new job, self-employed to salary
A refinance is assessed on the income you can prove today. On parental leave, most lenders use your return-to-work income, providing there's an employer letter and some savings to cover the gap while you're off. Self-employed going to a salary, the timing comes down to which version of your income stacks up better: tax returns before the change, or payslip and contract after it, and some lenders want probation finished first.
Visa status works the same way. A temporary visa shortens the list of lenders, and permanent residency opens it right up, which is when we revalue and see whether the juice is worth the squeeze. And if you only want to fix with the bank you're already with, a drop in income doesn't come into it, because nobody is reassessing anything.
Specialist lender to big bank
Some people start with a specialist lender on purpose: the credit was rough, or the business was too new for full financials, and the specialist was the one that said yes. That's a first step with a plan attached, not a trap. The usual first chance to move is around 12 months of clean repayments, either to a better product at the same lender or across to a mainstream bank if the income supports it. If you're close, the reduced buffer can tip it.
When you can't move: reprice where you are
Sometimes no other lender will take the loan today. Your current bank still doesn't need to reassess you to drop your rate, so ring the retention team, tell them what you've seen elsewhere and ask them to match it. Don't ask, don't get. You can also fix with them without reapplying. Then we set a trigger to look again: 12 months of clean repayments, a revaluation, or the income settling.
The honest part
Not every refinance should happen. If LMI comes back into it, or you're likely to sell inside a year or two, the costs of moving can eat the saving, and a sharper rate where you are is the better result.
And a decline from one bank tells you about that bank's rulebook, not about you. The fix is knowing which wall you hit before the next application goes in.
Told you can't switch? Let's find out why.
A 30 minute call. Bring your latest loan statement and roughly what the place is worth. I'll tell you which wall you're hitting, whether there's a lender you fit, and if there isn't, what to ask your current bank for.
No application, no credit check, nothing on your file. Just the numbers.
Common questions about refinancing knock-backs
Why won't the bank refinance me if I've never missed a repayment?+
Because a refinance is a full reassessment. The new lender tests your income and expenses at your rate plus a buffer, generally around three percentage points. Plenty of people paying comfortably today fail that on paper. A reduced-buffer path at some lenders is often the way through.
Can I refinance if my LVR is over 80%?+
Yes, but lenders mortgage insurance may be charged again on the new loan and pricing above 80% is often higher. Most reduced-buffer refinance paths also stop at 80%. Run the numbers first.
Will a past hardship arrangement stop me refinancing?+
Generally not on its own. Hardship information stays on your credit report for 12 months, and lenders set their own look-back on top: some consider you three months after it ended, some want six or 12 months of clean repayments, and at least one wants two years. Which lender you go to matters.
What credit score do I need to refinance?+
There's no single number. Lenders read the file under the score. A low score with no missed repayments or defaults will often still refinance. Missed repayments and defaults narrow the list of lenders and usually rule out the sharpest refinance paths.
What can I do if no other bank will take my loan?+
Reprice where you are. Your current bank doesn't need to reassess you to lower your rate or let you fix, so call the retention team with a competing offer in hand.
Next question
Refinancing with a brokerHow a switch actually works once the wall is out of the way.
Related reading
Is your bank charging you more than your neighbour? Why your bank said no Every refinancing answer in the library The full guide: Bank valuations, explained The full guide: Bank or non-bank lender The full guide: Cross-collateralisation, explainedStraight answers in this guide
I've never missed a repayment, so why won't the bank refinance me? Can I refinance if my value dropped or my LVR is over 80%? What credit score do I need to refinance? Does refinancing hurt my credit score? I had a hardship arrangement a couple of years ago. Will that stop me refinancing? I'm with a specialist lender. Am I trapped, or how do I get over to a big bank? Can I refinance while on maternity or parental leave? Can my bank refix my rate if my income has dropped, or do I need to reapply? I'm self-employed and about to start a salary job. Should I refinance before or after? Once my partner gets permanent residency, can we refinance to a cheaper lender? Should I call my bank's retention team myself? Can I refinance just one of my properties and leave the rest with my current bank?Got a question this page didn't answer? Send it to me and it goes on the list.