Bad Credit Home Loan Refinance: How to Refinance with Poor Credit

Dylan BertovicWritten by Dylan Bertovic

Refinancing a home loan can be a smart financial move, especially when interest rates drop or your financial situation changes. But what if your credit score isn't ideal? The good news is that refinancing is still possible, even if you've faced late payments, defaults, or financial hardship. This article will help you explore your options for a Bad Credit Home Loan Refinance in Australia.

Whether you aim to reduce your mortgage repayments, consolidate high-interest debts, or access your home equity. Stryve Finance will break down everything you need to know from eligibility and loan types to improving your approval chances. So you can take control of your financial future.

What Is Bad Credit Home Loan Refinancing?

Bad Credit Home Loan Refinance replaces your current mortgage with a new one, even if your credit history includes missed repayments, defaults, or a low credit score. Credit scores below 550 in Australia are typically classified as "bad," but that doesn't mean you're out of options.

At Stryve Finance, we specialise in helping Australians refinance their home loans even with bad credit. We go beyond just your credit file and consider your real-world financial circumstances. That includes your income consistency, the equity you've built in your home, and your ability to manage repayments moving forward. We aim to allow you to restructure your loan and get back on track financially.

With bad credit refinancing, the goal is to help you reset your financial path, reduce financial stress, and leverage your home as a powerful asset even if your past isn't perfect.

Benefits of Bad Credit Home Loan Refinancing

  • Lower your monthly mortgage repayments.
  • Consolidate high-interest debts into your home loan.
  • Lock in a more manageable interest rate
  • Access your home equity for renovations or expenses
  • Rebuild your credit through consistent repayments
  • Shift from interest-only to principal & interest for long-term savings

Eligibility Criteria for Refinancing with Bad Credit in Australia

Refinancing a home loan with bad credit in Australia is possible, especially when working with specialist lenders who take a broader view of your financial situation. While traditional banks often reject applications with credit scores below 600, mortgage brokers like Stryve Finance connect you with alternative lenders who assess your overall financial position more holistically.

Key eligibility criteria typically include a credit score of 400 or higher, 10–20% equity in your property, stable income or cash flow, and a recent history of consistent repayments. Even if you've faced defaults, arrears, or a discharged bankruptcy, you may still have viable refinance options through the right lender network

At Stryve Finance, we help clients refinance their home loans by focusing on real-world affordability, not just a credit score. Whether you're employed, self-employed, or recovering from financial hardship, we work with a network of non-conforming refinance lenders to provide bad credit home loan refinance solutions that lead to better loan terms, lower repayments, and a path back to financial control

Types of Bad Credit Refinance Options

If you've been declined by mainstream lenders due to a low credit score, don't worry; refinancing solutions are still available. Australia's lending environment includes many flexible loan products for people with less-than-perfect credit. These are often structured as bad credit home loan refinance options, tailored to help borrowers regain control of their finances.

These products cater to borrowers with defaults, irregular income, or unique financial situations. By working with non-conforming refinance lenders, you can access loan options that prioritise your current ability to repay rather than your past credit history. Standard bad credit home loan refinance solutions include:

Loan TypeIdeal ForKey Features
Debt ConsolidationBorrowers with multiple high-interest debtsCombines debts into home loan; lower interest and simplified repayment
Low Doc RefinanceSelf-employed or small business ownersRequires bank statements or BAS; no full financials needed
Guarantor RefinanceBorrowers with family supportUses a family member’s property as security; may avoid Lender’s Mortgage Insurance (LMI)
Non-Conforming LoansThose with defaults, court judgments, bankruptciesFlexible approval criteria; tailored to unique financial situations
Refinance with DefaultsPeople with recent or unpaid defaultsFocus on equity and income stability, not just credit history

Each of these options helps open the door to refinancing, even when your credit score doesn't tell the full story.

Steps to Apply for a Bad Credit Home Loan Refinance

Refinancing your mortgage with bad credit might seem overwhelming, but it becomes a manageable and empowering process with the right lender on your side. Stryve Finance specialises in helping Australians navigate bad credit home loan refinance options, even with low credit scores, past defaults, or irregular income.

Our tailored approach means we look beyond your credit report to understand your broader financial picture. By following a strategic process, you can access better terms, reduce your repayments, and take control of your financial future through a well-structured bad credit home loan refinance.

Step-by-Step Guide with Stryve Finance:

  1. Check Your Credit Report
    Start by getting a free credit report from Equifax, Experian, or Illion. Stryve Finance can help you interpret the results and identify opportunities for quick wins.
  2. Review Your Home Equity
    Equity is key. Our team will assess your current home value and remaining loan balance to determine if you qualify for refinancing.
  3. Manage Existing Debts
    If possible, reduce or consolidate debts to strengthen your application. Stryve Finance can explore debt consolidation home loan bad credit options that work with your situation.
  4. Consult a Specialist at Stryve Finance
    Our finance experts specialise in refinance home loan bad credit Australia products and have access to a network of flexible lenders and non-conforming solutions.
  5. Prepare the Right Documentation
    Whether you’re self-employed or PAYG, we help gather the paperwork needed to demonstrate your ability to repay including income proof, loan statements, and ID.
  6. Submit and Compare Offers
    We handle the application process and negotiate on your behalf to secure competitive terms even if your credit score is under 600.
  7. Refinance and Rebuild
    Once your new loan is approved, focus on consistent repayments. Stryve Finance will guide you through each stage and support your long-term financial goals.

How to Improve Your Approval Chances

While many lenders offer bad credit mortgage refinance options in Australia, improving your profile can significantly increase your chances of approval and may even unlock better interest rates and terms. Lenders look beyond your credit score, so taking a few strategic steps before applying can make a meaningful difference.

Even if you're working with non-conforming refinance lenders, demonstrating financial responsibility, providing complete documentation, and reducing perceived risk can help strengthen your case. The better your profile, the more favourable your refinance terms will likely be. Here are tips to boost your refinancing Potential.

  1. Clear or reduce existing debts to lower your debt-to-income ratio.
  2. Avoid new credit enquiries 3-6 months before applying.
  3. Provide full financial documentation or use low-doc alternatives if self-employed.
  4. Save for fees or show available savings to strengthen your position.
  5. Add a co-signer or guarantor for added security if possible.
  6. Explain any past credit issues clearly and honestly in your application.
  7. Demonstrate consistent mortgage repayments on your current loan.

Risks and Considerations

Refinancing your home loan can open the door to reduced repayments and debt relief, but it's not without risk. Since borrowers with lower credit scores are considered riskier, you might face higher interest rates, additional fees, or limited lender options.

Even when working with a trusted mortgage broker like Stryve Finance, which helps Australians connect with specialist lenders and navigate the refinancing process, it's essential to understand the potential drawbacks.

These can include extending your loan term, increasing total interest costs, or dealing with tighter eligibility requirements. By being fully informed about the nuances of bad credit home loan refinance, you'll be better equipped to decide whether refinancing is right for your financial future

Pros vs Risk

ProsRisks & Considerations
Lower monthly repaymentsHigher interest rates than standard loans
Consolidate multiple debts into one manageable loanAdditional fees (application, valuation, discharge)
Access home equity for renovations or emergenciesMay require at least 10–20% equity in the home
Chance to improve your credit score with regular paymentsLoan term reset could lead to more interest paid over time
Switch from a variable to fixed rate for stabilityApplication rejection possible if documents or income are insufficient
Tailored solutions from non-conforming refinance lendersFewer lender choices compared to borrowers with strong credit

Case Studies

Below are a couple of example scenarios where homeowners overcame financial challenges and successfully refinanced their home loans with the help of non-conforming lenders. These stories show that with the proper guidance, a poor credit score doesn't have to hold you back from financial recovery.

Case Study 1: Single Mum in Melbourne

Situation: Emma, a single mother of two, had a credit score 515 due to unpaid medical bills and a short-term job loss during COVID-19.

Solution: She worked with a broker who connected her with a lender offering a bad credit mortgage refinance in Australia.

Outcome: By consolidating her credit card and car loan debts into her mortgage, she reduced her monthly outgoings by $450 and improved her cash flow significantly.

Case Study 2: Self-Employed Tradie in Perth

Situation: Josh, a self-employed electrician, had irregular income and no recent tax returns, making it hard to qualify with traditional banks.

Solution: He applied for a low doc refinance loan through a specialist lender who accepted 12 months of bank statements as proof of income.

Outcome: He accessed $30,000 of his home equity to upgrade his work vehicle and streamline his business while securing manageable repayments.

Frequently Asked Questions (FAQ)

Can I refinance my home loan with bad credit in Australia?

Yes, you can. While major banks may decline applications from borrowers with poor credit, Stryve Finance partners with a network of specialist and non-conforming lenders that assess your complete financial picture, not just your credit score. This opens up refinancing options even if you've had defaults, late payments, or a discharged bankruptcy.

Will refinancing improve my credit score?

Potentially, yes. If you consolidate high-interest debt and make timely repayments on your new loan, refinancing can help rebuild your credit profile over time. At Stryve Finance, we'll guide you toward bad credit home loan refinance lenders that support long-term financial recovery.

What types of loans are available for bad credit refinancing?

  • Non-conforming loans (for credit-impaired borrowers)
  • Low doc loans (outstanding for self-employed individuals)
  • Guarantor-supported refinancing
  • Debt consolidation home loans
  • Stryve Finance will help you compare these options based on your unique situation

Does applying for refinancing hurt my credit score?

Only slightly and temporarily. A credit inquiry may lower your score by a few points, but this is often outweighed by the long-term benefits of a successful bad credit home loan refinance. Our mortgage specialists will minimize the impact by submitting your application strategically.

Why should I use a mortgage broker like Stryve Finance?

Working with a broker gives you access to lenders not available directly to the public. Stryve Finance simplifies the process, matches you with the right lender, and improves your chance of approval even with bad credit while saving you time and stress

Take the First Step Toward a Better Financial Future with Stryve Finance

Don't let a low credit score prevent you from improving your mortgage situation. At Stryve Finance, everyone deserves access to innovative, flexible lending solutions, no matter their credit history. Our team of expert mortgage brokers will help you compare the best bad credit refinance home loan options in Australia, guiding you every step of the way.

  • ✅ Free, no-obligation consultation
  • ✅ access to non-bank and specialist lenders
  • ✅ Tailored solutions—even with defaults or low doc income
  • ✅ Fast turnaround with expert support

📞 Ready to get started?

Call us on 1300 202 285, or click below to book your free refinance assessment today

Dylan Bertovic

Dylan Bertovic

Dylan Bertovic is the Director and Senior Finance Broker at Stryve Finance, specialising in non-traditional lending solutions. He helps clients across Australia with tiny home loans, construction finance, equipment and asset lending, refinancing, and investor loans. With deep expertise in self-employed and renovation mortgages, Dylan is known for crafting tailored strategies that get results

logo white