How long after a default can I refinance to standard rates?

Typically 2 years from the default listing date with consistent specialist loan repayments and no further credit issues. Some mainstream lenders accept earlier with strong other factors — clean savings, low LVR, stable income — and some second-tier lenders may consider an application at 12–18 months. We assess each file individually.

How much can I save by refinancing from a specialist lender?

Specialist non-conforming rates are typically 1–3% above standard mainstream rates. On a $700K loan, that's roughly $7,000–$21,000 a year in extra interest. After discharge fees and setup costs ($1,000–$2,000 in most cases), the move pays for itself in months.

Will my old defaults still affect the refinance?

Defaults stay on your credit file for 5 years from the listing date (7 years for serious credit infringements). Even while still listed, mainstream lenders may accept the application if you have 2+ years of clean repayments, a reasonable explanation for the original default, and good current serviceability.

What happens if mainstream lenders still decline?

You either stay with the specialist lender for another 6–12 months and re-apply, or move to a second-tier or mid-tier lender that accepts post-default files. There are several lenders that operate in the gap between specialist and big-four — often with rates only 0.3–0.7% above the major banks.

Should I pay off small debts before applying to refinance?

Usually yes. Paying off credit cards, BNPL accounts and personal loans improves your serviceability buffer and reduces total monthly commitments — often the single biggest factor in whether a mainstream lender approves your file. Just keep at least one credit account active to maintain your credit score.

What about exit fees and break costs from my specialist loan?

Variable-rate specialist loans typically have only a discharge fee ($300–$600). Fixed-rate specialist loans can have meaningful break costs depending on the remaining fixed term and interest rate movements — we'll calculate this with your current lender before recommending the refinance.

Do I need to use a broker, or can I apply directly?

You can apply directly, but post-default refinances are one of the highest-friction loan types in the Australian market. Each lender has different rules on default age, default amount, paid vs unpaid, listing history and current serviceability. A broker who places these files weekly will know which lender to approach first — saving you a credit enquiry hit on your file.

Home Loan Refinancing

2 yrs

Clean repayments typically required

1–3%

Typical rate saving

5 yrs

Default visible on credit file

Broker fees to you

Who this guide is for

This page is for Australians currently with a specialist non-conforming home loan because of past credit issues — and who are now in a position to move to a mainstream or second-tier lender. We help these borrowers every week:

2+ years of clean repayments on your existing specialist loan, with no missed payments and no new credit defaults.
Original defaults paid out, removed, or aged enough that mainstream lenders will consider the file.
Stable current income — PAYG, self-employed with 1+ year ABN, or contract — that supports the new loan repayments.
Multicultural and self-employed borrowers in particular — many were forced into specialist lenders by income-documentation rules rather than serious credit problems, and qualify for mainstream rates much earlier than they realise.

The real picture: why post-default refinance is hard (and worth it)

Specialist non-conforming lenders price for risk. When they took you on after a default, they charged a margin of typically 1–3% above standard variable rates. That margin made sense at the time — your credit file was a question mark, and they were the only lender willing to approve you. Two years on, that question mark has answered itself: you've made every repayment on time. But the specialist lender keeps charging the original margin, because they have no incentive to drop it for you.

The fix is straightforward: you refinance away from them. The catch is that mainstream lenders — the big four and most well-known second-tier banks — still see the original default on your credit file (it stays for 5 years from the listing date, sometimes 7). Whether they approve you depends on the age of the default, the amount, whether it's paid, your repayment history since, your current serviceability, and the LVR. Each lender weights those factors differently.

A general broker with a generic process will burn 2–3 credit enquiries on your file before they find a lender that approves. By then your file looks worse than when you started. A broker who places post-default refinances every week will know which lender to approach first — saving the credit hits and getting you to the right rate faster.

How Mortgagefy helps

Mortgagefy specialises in post-credit-recovery refinances. We pull your credit file (with permission), assess your current position, and identify the 2–3 mainstream or second-tier lenders that are most likely to approve. We then submit to the strongest fit first — preserving your remaining lender options as a fallback rather than wasting them on speculative applications.

For each candidate lender we model: the new rate, the discharge cost from your current lender (including any fixed-rate break costs), establishment fees on the new loan, monthly repayment difference, and total interest saved over the next 5 years. You see the actual numbers before you apply, not after.

If your file isn't quite ready for mainstream yet — for example, the default is too recent or your serviceability is borderline — we'll tell you exactly what to do (pay off X debt, wait Y months, restructure income evidence) so you're approval-ready when we resubmit. We don't waste your time on applications we don't expect to approve.

Want to model the savings yourself first? Use our Sydney home loan calculators — the repayment calculator will show you exactly what a 1% or 2% rate drop is worth on your loan size.

How it works — 4 simple steps

Free credit assessment

A 20-minute call covering your current loan, repayment history, default details and current income. No credit pull at this stage — pure assessment.

Compare lender options

We model 2–3 mainstream or second-tier lenders most likely to approve, with full numbers — new rate, discharge costs, break fees, savings over 5 years.

Application + discharge

We compile and submit the strongest application first, manage the new lender, and coordinate the discharge from your current specialist lender.

Settle on better rates

You move to the new loan and start saving on day one. We stay in touch for annual rate reviews — often you can refinance again in 18–24 months as your file ages further.

Why use a post-default specialist broker

Right lender first time

We submit to the strongest fit first — saving credit-enquiry damage to your file.

Real numbers

You see new rate, break costs, discharge fees and 5-year savings before you apply.

Plan B if needed

If mainstream declines, we have a clear second- and third-tier path mapped out.

Free service

Lender pays us, not you. Full commission disclosure upfront.

Frequently asked questions

We use offer letters and vesting schedules to value RSUs conservatively. We present current vesting value + projected future vesting as a 3-5 year income average. This gives lenders confidence in your income stability while accounting for market volatility.

Both. We work with W2 employees, 1099 contractors, and consultants. For contractors, we use 2 years of tax returns plus business financials. We have lenders who specialise in contractor income—they understand the variability.

Unvested options have zero value for refinancing. We count only vested equity. If you have a 4-year vest, we use 25% of the grant value (what's vested) plus a conservative projection of future vesting.

If you've been in your new role 6+ months, most lenders will refinance. We'll use your offer letter plus 6 months of pay stubs. If less than 6 months, it's harder but possible with specialist lenders.

Yes, if you have 2+ years of bonus history. We average the past 2 years and present it conservatively. Some bonuses get counted at 50% to be conservative with variable compensation.

ESPP is counted as deferred compensation. If your company matches or you have a discount, we value it as part of total compensation package.

Ready to refinance off the specialist rate?

Free 20-minute assessment — no credit pull, no obligation. We'll tell you on the first call whether your file is ready for mainstream, and exactly what to do if it isn't yet.

Start Your Free Assessment Call 0432 634 648

Get your personalised answer in 2 minutes

Free, no obligation. We'll match you with the right lender for your situation.

Model your scenarios: Use our free home loan calculators to estimate borrowing capacity, repayments, and savings.

Refinance Home Loan After a Default: Move from Specialist to Mainstream Rates