Equity reduces the lender’s financial risk by providing security on the loan. If you have at least 20% equity in your home, you’d likely be able to refinance without having to get a guarantor.
You can still refinance if you have less than 20% equity in the home. However, you may need to look at options such as a guarantor or paying lender’s mortgage insurance (LMI).
As with a traditional home loan, you will need at least 5% equity in your home to qualify for a refinancing loan.
The more equity you have in your home, the less risky you appear to a lender – which can help you secure that refinance.