What is the serviceability buffer and why does it stop me?

The serviceability buffer is a 3% margin that APRA requires lenders to add on top of the actual loan rate when assessing whether you can afford the repayments. If you are applying for a rate of 6%, you are tested at 9%. This buffer was designed to protect borrowers from rate rises, but it now prevents many responsible borrowers from refinancing to a lower rate.

How does streamlined refinancing work?

Some lenders now assess refinancing applications based on your actual repayment history rather than a traditional serviceability test. If you have been paying your loan on time for at least 12 months and your loan is 80% or less of your property value, you may qualify for this pathway. Your track record of repayment is the evidence.

What if my property value has dropped?

If your loan is more than 80% of your current property value, streamlined refinancing may not be available. However, there may still be other options depending on your situation. Lendology assesses your full picture and will tell you honestly what is and is not possible.

Can investors use streamlined refinancing?

Some lenders do extend streamlined refinancing to investment loans, though the criteria can be stricter. Eligibility depends on the specific lender and your loan details. Lendology will check which options are available for your investment property.

Is there a cost to check if I qualify?

No. Lendology checks your eligibility at no cost and with no obligation. If you qualify, we handle the entire process. If you do not, we will tell you straight and explain what other options exist. Lendology is paid by the lender at settlement, not by you.

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True wellbeing begins at home.

Stuck on a high rate?
You shouldn't be punished for never missing a payment.

Q: What is mortgage prison?

Mortgage prison is when you are stuck on a high interest rate because you cannot pass the serviceability test to refinance, even though you have never missed a repayment. The test requires you to prove you could afford the new rate plus a 3% buffer, which most borrowers who took out their loan at lower rates cannot pass.

You've been paying your loan on time for years. But the banks won't let you refinance because of a test that has nothing to do with your ability to repay. We can help.

Book a free chat Call 08 8270 5138

36%

of borrowers are trapped

$3,000+

Save per year

serviceability test

60+

lenders compared

Home > Home Loans > Mortgage Prisoner Refinancing

The problem

What is mortgage prison?

When you apply to refinance, lenders don't test whether you can afford the new rate. They test whether you could afford the new rate plus 3%. So if you're looking at a rate of 6%, you're actually tested at 9%.

Most borrowers who took out their loan at 2% to 3% can't pass this test now - even though they've been making every repayment at the higher rate without any issues.

The result? You're stuck paying a rate you can clearly afford, with no way to move to a lower one. That's mortgage prison.

68%

of brokers say serviceability is the number one reason clients can't refinance.

Source: MFAA

Sound familiar?

Who gets trapped in mortgage prison

If any of these sound like your situation, you're not alone. These are the borrowers we help most often.

The solution

How we get you out

Some lenders now assess refinancing based on your actual repayment history, not a theoretical stress test. If you've been paying your loan on time for at least 12 months and your loan is 80% or less of your property's value, you may qualify for a streamlined refinance that doesn't require traditional income verification or serviceability testing.

This isn't a special deal or a workaround. It's a product category designed specifically for borrowers in your position. Your track record of repayment is the evidence, and for qualifying borrowers, it's enough.

You may qualify if

✓

12+ months on your current loan with a clean repayment history

✓

Loan is 80% or less of your property value

✓

Clear credit record

✓

Australian citizen, permanent resident, or eligible visa holder

Check if you qualify Call 08 8270 5138

How it works

Four steps to a lower rate

Chat with us

Free, no obligation. We look at your current loan, your rate, and your situation.

We check eligibility

We assess whether streamlined refinancing is right for your file and compare options across our panel.

We find a lower rate

We match you with a lender whose policy fits your situation, not just the cheapest rate on a comparison site.

You switch and save

Your new loan replaces the old one. Lower rate, same property, same repayments you've been making without issue.

What it could save you

The numbers on a typical switch

Your actual saving depends on your loan size, current rate, and the rate you qualify for. We calculate the exact number in your first chat.

Book a free chat Use the savings calculator

Illustrative example

On a $600,000 loan, dropping your rate by even 0.5% saves roughly $250 a month. That's $3,000 a year. Over five years, that's $15,000 back in your pocket - and you've been paying it to a lender who won't even let you leave.

~$250

Monthly saving

~$3k

Annual saving

~$15k

Over 5 years

Illustrative only. Based on a $600,000 loan with a 0.5% rate reduction. Your actual saving will depend on your loan size, current rate, and the rate you qualify for.

Free eligibility check

Check if you qualify

Tell us about your loan. Jason or Steve will review your situation and reply within one business day with an honest assessment of your options.

Common questions

Mortgage prisoner FAQs

Mortgage prison is when you're stuck on a high interest rate because you can't pass the serviceability test to refinance - even though you've never missed a repayment. The test requires you to prove you could afford the new rate plus a 3% buffer. Most borrowers who took out their loan when rates were lower can't pass it now, regardless of how reliably they've been paying.

Because the test lenders use to assess your refinance application is not about whether you can afford the new rate. It tests whether you could afford the new rate plus 3%. So even though you've been making every repayment at a higher rate than the one you're applying for, the calculator says you can't afford it. It's a regulatory requirement, not a reflection of your actual financial position.

The serviceability buffer is a 3% margin that APRA requires lenders to add on top of the actual loan rate when assessing whether you can afford the repayments. If you're applying for a rate of 6%, you're tested at 9%. This buffer was designed to protect borrowers from future rate rises, but it now prevents many responsible borrowers from refinancing to a lower rate - even when that lower rate would reduce their monthly costs.

Some lenders now assess refinancing applications based on your actual repayment history rather than a traditional serviceability test. If you've been paying your loan on time for at least 12 months and your loan is 80% or less of your property value, you may qualify for this pathway. The lender looks at the evidence - you've been making the repayments - rather than running a theoretical stress test. Lendology identifies which lenders offer this and matches you with the right one.

For streamlined refinancing pathways, the documentation requirements are significantly reduced. Some lenders assess primarily on your repayment history and loan-to-value ratio rather than full income verification. That said, every lender is slightly different. Lendology will tell you exactly what's needed based on the lender that best fits your situation, so there are no surprises.

If your loan is more than 80% of your current property value, the streamlined pathway may not be available. But that doesn't mean you're out of options. Depending on your income and overall position, there may be other lenders with more favourable serviceability assessments. Lendology looks at the full picture and will tell you honestly what is and isn't possible.

Some lenders do extend streamlined refinancing to investment loans, though the criteria can be stricter - lower LVR limits or longer repayment history requirements, for example. Eligibility depends on the specific lender and your loan details. Lendology will check which options are available for your investment property and give you a straight answer.

No. Lendology checks your eligibility at no cost and with no obligation. If you qualify, we handle the entire process. If you don't, we'll tell you straight and explain what other options exist. Lendology is paid by the lender at settlement, not by you.