Home Loan Refinancing for the Self-Employed

Home loan refinancing in Australia hit record highs during 2023, as many mortgage holders took a proactive approach to combating inflated interest rates. This included both employed and self-employed individuals. But as a group, self-employed homeowners may be missing out on some great deals because of the challenges sometimes associated with self-employed refinancing.

Did you know that 61% of all Australian businesses are classified as self-employed? According to a June 2023 report by the Australian Small Business and Family Enterprise Ombudsman, there are now 1,550,151 self-employed businesses in Australia. That figure represents a significant portion of the Australian working population. 

While being self-employed comes with some excellent perks (being your own boss, setting your own hours, working from home), it can also present some challenges, particularly when it comes to home loan refinancing.

How Important is Home Loan Refinancing?

Refinance home loan deals can potentially save you tens of thousands of dollars over the life of the loan. This is particularly the case for homeowners who have reached the end of their fixed interest rate term. 

Once the fixed term ends, the average loan will automatically roll onto the lender’s standard variable rate. And this new variable rate is often substantially higher. This is why it’s so important to do routine “home loan health checks” to ensure you’re still getting a competitive interest rate.  

What Are the Benefits of Refinancing a Home Loan?

Refinancing a home loan offers multiple advantages for homeowners. Some of these benefits include:

• Lower interest rates

Reducing overall interest costs and potentially lowering monthly repayments.

• Improved loan terms

Such as a longer repayment period or a switch from a variable to a fixed-rate loan.

• Debt consolidation

Combining multiple loans into a single, more manageable payment.

• Access to equity

Use equity to fund investment purchases or planned renovations.

• Greater financial flexibility

Adapt to changing financial circumstances (particularly useful for self-employed individuals with variable income).

Despite the obvious benefits, some self-employed homeowners hold off on home loan refinancing because of the challenges that can be involved.

What Are the Challenges of Self-Employed Refinancing?

Self employed refinancing deals can present some unique challenges. The four most common issues are:

Trouble verifying income

Self-employed individuals often find it more challenging to prove they have a stable income. Lenders will ask for detailed financial records to accurately assess your income.

Proving your business is stable

Self-employed borrowers may encounter challenges if they’ve only recently started operating or if they’ve experienced dramatic income fluctuations.

Insufficient equity

If the value of the loan you need to refinance is worth more than 80% of the total property value, then you may struggle to gain favourable loan terms. You could also end up paying Lenders Mortgage Insurance.

Higher interest rates and fees

Some lenders view self-employed applicants as higher-risk, so they will only offer a home loan refinance with less favourable terms.

The key to successfully overcoming these challenges is being prepared and getting the right advice.

How Can You Overcome Self-Employed Refinancing Challenges?

1. Verifying your income

Make sure you’re fully up-to-date with all the paperwork for your business and personal finances. If you’re still concerned about proving your income, talk to a broker about whether a low-doc loan may be more suitable.

2. Proving business stability

Demonstrate the stability of your business by providing detailed financial statements, tax returns, and BAS statements going back at least 2 years. Highlight any growth that the business has experienced (including any ongoing or recurring work contracts).

3. Building your equity

Focus on building your equity. This could be achieved by making additional loan repayments or by investing in home improvements that will add immediate value.

4. Use a broker to find the best refinancing deals

A broker can compare multiple loan products from a range of lenders. They’ll also identify which lenders are more favourable towards self-employed refinancing loans. Some mainstream lenders will use 1-year financials to work out your income standing alone, which means that if a business has grown, it is a fairer way to work out income moving forward than an average of 2 years, which can bring the income down.

Full-Doc vs Alt-Doc (Low-Doc): Which Suits You?

When you’re self-employed, home loan refinancing starts with choosing the right documentation path. Both options can work. What matters is matching the policy to how your income is shown on paper.

Full-Doc at a Glance

If your tax returns are up to date and your income is stable, Full-Doc is often the most cost-effective way to refinance home loan debt.

• Typically uses 1–2 years of personal and business tax returns, Notices of Assessment, and financial statements.
• Can deliver sharper pricing and broader product choice.
• Best for businesses with clear, consistent earnings.

Alt-Doc (Low-Doc) at a Glance

If timing or cash flow means your latest returns don’t yet reflect your true earnings, Alt-Doc can keep home loan refinancing moving.

• Accepts alternatives such as BAS statements, business bank statements or an accountant’s declaration.
• Useful when income is seasonal or recently grown.
• Rates and fees can be higher than Full-Doc, but it can still make sense if the savings stack up.

Which Home Loan Refinancing Option Is Right For Your Situation?

The goal of self employed refinancing isn’t to “fit a box”—it’s to present your income clearly so a lender can assess it. If your paperwork is ready, Full-Doc is usually the best first step. If not, Alt-Doc can bridge the gap so you can refinance home loan facilities without waiting another year. Either way, home loan refinancing should leave you better off after costs, not just on the headline rate.

What Lenders Look For (Self-Employed Refinance Criteria)

Lenders don’t just check your interest rate—they look at how resilient your business is and how comfortably you can service the loan after refinancing a home loan.

• Time in business: ABN age and (if registered) GST history help show stability.
• Income trend: Many lenders prefer steady or improving earnings across the last 12–24 months.
• How income is verified: Full-Doc (returns/financials) or Alt-Doc (BAS/bank statements/accountant letter).
• Equity and LVR: More equity generally improves pricing and can remove LMI from your home loan refinance.
• Credit conduct: Clear repayment history on home, car, cards and ATO payment plans supports your case.
• Business structure: Sole trader, company or trust—lenders want to see how profits flow to you.
• Living expenses: A realistic budget shows you can manage cash flow after refinancing.

A good submission packages all of this so home loan refinancing is simple to assess; no surprises and no missing pieces.

A good submission packages all of this so home loan refinancing is simple to assess; no surprises and no missing pieces.

Clear, complete documents speed up home loan refinancing and reduce back-and-forth with assessors. Use this quick checklist to prepare the right pack.

Full-Doc pack

• Last 1–2 years personal and business tax returns
• Corresponding Notices of Assessment
• Profit & Loss and Balance Sheet (most recent year, finalised)
• Recent business bank statements (typically 3–6 months)
• Home loan and other credit statements (last 6 months)

Alt-Doc (Low-Doc) pack

• BAS statements (generally the last 4 quarters or 12 months)
• Business bank statements (usually 6–12 months)
• Accountant’s declaration where required
• Recent ABN/GST details

Identity & property

• Photo ID, rates notice, contract/settlement docs (if applicable), insurance certificate (on request)

Bring what you have, we’ll triage and confirm what’s needed so your home loan refinancing application moves fast. This is the practical way to approach refinancing a home loan when you’re self-employed.

Home Loan Refinancing Costs & When It’s Worth It

The right home loan refinance should leave you ahead after costs. Here’s what to expect and how to judge the value.

Common Costs

• Discharge/settlement fee from your current lender
• Application and valuation fees with the new lender
• Break costs if you exit a fixed rate early
• LMI if your new loan pushes LVR above ~80% (or risk fees with some lenders)
• Ongoing package/annual fees on some products
• Government registration charges

How To Tell If It Stacks Up

1. Estimate savings from the new rate/features over your time horizon.
2. Subtract all once-off and ongoing costs.
3. If the breakeven is quick (months, not years) and the structure suits your goals, home loan refinancing is likely worth it.

Talk to a Mortgage Broker About Home Loan Refinancing When Self-Employed

Home loan refinancing may feel overwhelming when you’re self-employed. But it doesn’t have to. For expert advice on how to successfully refinance a home loan while self-employed, book an appointment with North Brisbane Home Loans.