Bad Credit Refinance Australia: Can You Refinance in 2026?

Quick Answer: Refinancing with bad credit in Australia is possible through non-conforming lenders, but the rate premium — typically 2–4% above mainstream — can cost more than staying on your current loan. If your bad credit is caused by unlawfully listed defaults under the Privacy Act 1988, professional removal in 30–90 days can unlock mainstream refinancing at rates that save significant money. Check removability before applying anywhere.

If you're stuck on a high-rate loan and can't refinance because of your credit file, there's a real path forward — but it depends entirely on why your credit file looks the way it does. This guide cuts through the complexity and gives you the information to make the right call.

Why Bad Credit Blocks Refinancing

Refinancing is essentially a new loan application. The new lender runs a fresh credit check and applies the same approval criteria as they would for any loan. If your file has active defaults or court judgements, mainstream refinance applications get declined for the same reason your original mortgage application would have been.

Non-conforming lenders will consider refinance applications from impaired credit borrowers — but at rates that need to be weighed carefully against your current loan and the cost of staying put.

Refinance Rate Comparison: Clean vs Bad Credit

Real Case Study: Simone, Newcastle — Saved $197,000 by Waiting 52 Days

Simone, 44, a project manager from Newcastle, had a non-conforming home loan at 10.8% p.a. that she'd taken out three years earlier when defaults were blocking mainstream lending. Now she wanted to refinance, but her credit file still carried one active default — a $1,100 listing from a private health insurer.

The default had been listed, she discovered during her ACS assessment, while she was actively appealing the insurer's decision through the Private Health Insurance Ombudsman. Listing during an active complaint is a breach of the Credit Reporting Code.

ACS challenged the listing. Removed in 33 days. Simone's Equifax score moved from 512 to 719.

Her mortgage broker refinanced her $465,000 remaining loan balance to a major bank at 6.28% p.a.

Result: Simone's Equifax score moved from 512 to 719 in 33 days. The difference between 10.8% and 6.28% on $465,000 over the remaining 22-year loan term was approximately $197,000 in total interest saved. She waited 52 days from first contacting ACS to refinance settlement. She only paid when we succeeded. Subject to individual assessment; results may vary.

How to Prepare for a Bad Credit Refinance

1. Pull all three credit reports — know exactly what lenders will see
2. Get a free ACS assessment — if any entries are removable, this changes everything
3. If removal viable, pursue first — 30–90 days wait vs years of higher repayments
4. If not viable, engage a specialist mortgage broker with non-conforming expertise
5. Prepare documentation: loan statements, income evidence, property valuation estimate
6. Compare comparison rates — not headline rates — across multiple specialist lenders

When to Refinance Now vs Wait to Fix Your Credit

Refinance now (bad credit lender) if: Your current rate is extremely high (10%+), you've confirmed no entries are removable, and even the bad credit refinance rate is meaningfully lower.

Wait and fix your credit if: Any entries on your file might be removable — and a 30–90 day wait translates to years of significantly lower repayments.

The free assessment makes this decision straightforward. If nothing's removable, we'll tell you — and you can proceed to a bad credit refinance with full information. If something is removable, you'll know within 24 hours.

Frequently Asked Questions

Can I refinance my home loan with bad credit in Australia? Yes — non-conforming lenders like Pepper Money, La Trobe, Bluestone, and Resimac handle refinance applications from borrowers with impaired credit. Rates are higher than mainstream refinancing. The decision depends on whether the new rate is genuinely lower than your current rate, and whether credit repair could unlock mainstream rates instead.

Will refinancing hurt my credit score? Yes — a new refinance application generates a hard enquiry. If you're already close to the mainstream threshold, an enquiry could push you just below. Get your credit file assessed before applying so you know exactly where you stand.

How much equity do I need to refinance with bad credit? Non-conforming refinance lenders typically require 20% equity (80% LVR or lower) for impaired credit applicants. Some specialist lenders will consider 85% LVR in strong cases. Your equity position is often as important as your credit score for refinance applications.

Does paying a default let me refinance with a mainstream lender? No. Paying a default changes its status to "paid" or "settled" on your file but does not remove it. It continues to affect your score and lenders' decisions for the remainder of its 5-year life. Only professional removal under the Privacy Act 1988 clears it entirely.

How long after fixing my credit can I refinance? Immediately — there is no mandatory waiting period after a default is removed. Many clients apply for refinancing within days of removal confirmation and receive approval within 2–4 weeks.

Find Out If Your Refinance Blocker Can Be Removed

Before accepting a bad credit refinance rate or staying trapped on a high-rate loan, get a free assessment. One phone call could be worth six figures.

Australian Credit Solutions — ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild. No Win No Fee. 98% success rate on accepted cases. Award winner 2022, 2023, 2024.

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This article provides general information only and does not constitute legal or financial advice. Australian Credit Solutions Pty Ltd holds ASIC ACL 532003. Results may vary.

Related reading: Refinancing With Bad Credit → | Default Removal Services →

Free credit reports: equifax.com.au. Verify ASIC licences: asic.gov.au. Refinance calculators: moneysmart.gov.au.

Case study financial summary: On $465,000 remaining balance over 22 years, the rate difference between 10.8% and 6.28% saved Simone approximately $197,000 in total interest.