Refinancing a mortgage can be a smart financial move, whether you’re looking to secure a lower interest rate, reduce monthly repayments, or access home equity. However, getting approved for a home loan refinance isn’t always straightforward. Lenders assess multiple factors before approving an application.

To increase your chances, follow these key strategies.

1. Improve Your Credit Score

Lenders rely heavily on your credit score to evaluate risk. A higher credit score increases your chances of approval and can secure better interest rates. To boost your score:

• Pay all bills and loan repayments on time.
• Reduce outstanding debts.
• Avoid multiple credit inquiries before applying for refinancing.

2. Reduce Your Debt-to-Income Ratio

Your debt-to-income (DTI) ratio compares your total monthly debt payments to your gross monthly income. A lower DTI ratio signals financial stability, making you a more attractive borrower. To improve this ratio:

• Pay off high-interest debts before refinancing.
• Avoid taking on new debts, such as car loans or personal loans.
• Increase your income where possible, through side jobs or salary negotiations.

3. Maintain Stable Employment

Lenders prefer borrowers with consistent employment and steady income. A history of frequent job changes or gaps in employment can raise red flags. If you’re self-employed, ensure you have at least two years of financial records demonstrating stable income.

4. Increase Your Home Equity

The more equity you have in your property, the lower the risk for lenders. Most lenders prefer a loan-to-value ratio (LVR) of 80% or lower. To improve your equity position:

• Increase your property’s value through renovations or upgrades.
• Make extra repayments towards your current mortgage.
• Refinance only when property values are favourable.

5. Choose the Right Lender and Loan Type

Different lenders have different requirements and refinancing options. Research home loan lenders to find the best fit for your financial situation. Consider:

• Fixed vs. variable interest rates.
• Loan terms and repayment flexibility.
• Additional fees are associated with refinancing.

6. Prepare Your Financial Documents

A well-prepared application speeds up approval and demonstrates financial responsibility. Essential documents include:

• Proof of income (payslips, tax returns).
• Credit report.
• Bank statements.
• Current mortgage details.

Securing approval for a home loan refinance requires careful financial planning. By improving your credit score, reducing debt, maintaining stable employment, and selecting the right lender, you can strengthen your application. Proper preparation ensures a smoother refinancing process and better loan terms tailored to your financial goals.