How to Refinance Out of Keystart in Perth, WA, Your Practical Guide
Keystart did exactly what it was designed to do: it got you into a home when a standard lender wouldn't. Now that you've built some equity and your situation has changed, it's worth asking whether staying put is still the right call.
Refinancing out of Keystart isn't complicated, but the timing matters more than most borrowers realise. Keystart's own income and property limits, the LVR your equity has reached, and how mainstream lenders assess your current income all affect whether the switch makes sense right now or in six months' time. Whether you're on a standard Keystart Low Deposit loan, in the Urban Connect Shared Equity scheme, or somewhere between the two, the pathway out looks different depending on your position.
Our team helps Perth, WA homeowners work through the refinancing decision across 60+ lenders. The refinancing side of it is where most of the difference is made, and the right lender for your next stage often isn't one you'd find on your own.
Key takeaways
- Most mainstream lenders want at least 20% equity before they'll take a Keystart refinance.
- Keystart's Urban Connect shared equity share must be repaid at refinance or sale.
- Refinancing out too early can cost more than staying put for another year.
Is refinancing out of Keystart the right move in Perth, WA?
It can be, once your equity position and income support a mainstream loan. Keystart is a transitional lender, and its own guidance encourages borrowers to refinance when they're ready. The question isn't whether to leave, it's whether the numbers stack up today. Most mainstream lenders want a loan-to-value ratio at or under 80% before they'll consider a Keystart refinance without LMI, which means you generally need at least 20% equity in the property. REIWA data shows Perth's broader market has seen strong growth over the 12 months to August 2026, and in some suburbs that equity threshold is now within reach for borrowers who bought three or four years ago.
How does Keystart refinancing actually work?
Refinancing out of Keystart works the same way as any refinance: you apply to a new lender, they assess your income, expenses and the property's current value, and if approved they pay out the Keystart balance. Keystart then closes your account. The key difference from a standard refinance is that Keystart has no exit fees or discharge penalties, which removes one of the usual costs of switching. If you're in the Urban Connect Shared Equity scheme, Keystart's equity share must also be repaid at the point of refinancing, not just the loan balance, and the repayment amount is based on the property's current market value at that time.
We see a lot of Keystart borrowers who are ready to leave but don't realise they have enough equity yet. The growth in Perth's market over the last two years has closed the gap for many of them, and a current valuation often tells a different story to what they're expecting.
Joe Del Borrello · Director, Launch Finance · Chat to the Launch team →
What do you need to qualify to refinance out of Keystart?
Mainstream lenders run the same serviceability assessment on a Keystart refinance as any other application. Your income, expenses, existing debts and the new loan's repayments are all tested at the actual rate plus the 3.0% APRA serviceability buffer. REIWA data for the Perth market shows that in many growth suburbs, property values have moved significantly over the last 12 months, which affects where your LVR sits today.
What most lenders want to see:
- › LVR at or under 80%: most mainstream lenders need at least 20% equity in the property. Below that, LMI typically applies or the application is declined outright.
- › Consistent income: two recent payslips for PAYG borrowers, or two years of tax returns for self-employed applicants, showing stable or growing income.
- › Clean repayment history: no missed or late payments on the Keystart loan. Your repayment history is the clearest evidence of how you manage the commitment.
- › Manageable existing debts: credit card limits, personal loans and car finance all reduce borrowing capacity. Lenders assess your total committed credit, not just the Keystart balance.
- › Urban Connect equity repayment funds: if your Keystart loan includes a shared equity component, you'll need to repay the Housing Authority's share at refinance. The amount is calculated on the current property value, not what it was worth when you bought.
Source: APRA (serviceability buffer); Keystart (loan conditions and Urban Connect product terms).
What does it cost to refinance out of Keystart in Perth?
Keystart charges no exit fee and no early repayment penalty on its standard Low Deposit loan, which removes one of the main costs borrowers expect. The costs you do face come from the new lender's side: application or establishment fees, a government mortgage discharge fee for the Keystart loan and a new mortgage registration fee, settlement agent costs, and potentially a lender's valuation. If your LVR is above 80% at the time of refinancing, LMI will apply and it's typically the largest single cost in the transaction.
For borrowers in the Urban Connect Shared Equity scheme, the Housing Authority's equity share is repaid at current market value. If the property has grown since you bought, the repayment amount is higher than the original shared amount in dollar terms, because the share is a percentage of the property, not a fixed sum. That's worth understanding before you instruct a settlement agent.
A useful way to think about the costs: add the new lender's fees plus any LMI to the interest saving you'd generate over two years on the new loan. If the saving is larger, the switch is worth it. If it isn't, waiting until you cross the 80% LVR threshold is usually the better move.
| Get in touch Need help with refinancing out of Keystart? We're a local team who understand how lenders actually assess your situation, not just your rate. We'll compare your options across 60+ lenders to find the right fit.
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How long does it take to refinance out of Keystart?
The refinancing process from application to settlement typically takes four to eight weeks, depending on the new lender's processing times and whether a valuation is required. Keystart's discharge process is straightforward once you have formal approval from the new lender, and there's no extended notice period required on their side.
What tends to slow things down is document gathering rather than lender turnaround. Having your last two payslips, your most recent Keystart statement, a rates notice and three months of bank statements ready before you apply keeps the timeline tight. If the new lender orders an upfront valuation, that adds a week to ten days depending on valuer availability in your area.
When does refinancing out of Keystart not make sense?
The most common mistake is refinancing too early, before you've crossed the 80% LVR threshold. If your equity is at 82% or 83%, the LMI premium on a mainstream loan can easily outweigh two or three years of interest saving. Staying with Keystart for another year while you pay down more principal, or while the property value grows further, often produces a better financial outcome than switching now.
It also doesn't make sense if your income has changed since you took out the Keystart loan in a way that makes mainstream serviceability harder. A period of reduced income, a move to casual or self-employed work, or significant new debt can all affect whether a mainstream lender will approve the refinance on terms that are actually better than what you have. In those cases, the conversation is worth having early, because the answer shapes what you do with your income and debts in the lead-up to the application.
If you're in the Urban Connect Shared Equity scheme and the property has appreciated significantly, the equity repayment amount may be larger than you're expecting. Running the numbers on what repaying Keystart's share actually costs, versus the saving on your ongoing rate, is the right first step before committing to the switch.
Where the equity is close to 80% but not quite there, we'd usually recommend waiting the extra reporting period rather than paying LMI to cross the line early. The premium adds to the loan and offsets the rate saving for longer than most borrowers expect.
Joe Del Borrello · Director, Launch Finance · Chat to the Launch team →
How to refinance out of Keystart in Perth, WA, step by step
The process is straightforward once you know what each step involves. Most borrowers are surprised by how quickly it moves once the documents are in order.
Step 1: Talk to us
We start by looking at your current Keystart balance, your property's likely value, and your income position to work out whether you're ready to refinance and which lenders are worth approaching.
Step 2: Assess your equity and prepare your documents
We order a valuation or desktop estimate to confirm your LVR, then pull together your payslips, bank statements, Keystart statement and a rates notice so the application is complete from day one.
Step 3: Match you to a lender and submit the application
We compare your options across our 60+ lender panel, looking at rate, fees, offset and redraw features, and which lenders' servicing assessment works best for your income type, then submit to the strongest candidate.
Step 4: Manage approval through to settlement
Once formal approval is in, we coordinate with the new lender and Keystart's discharge team so settlement runs on time and you're not chasing paperwork between the two sides.
What goes wrong when people refinance out of Keystart?
The common pitfalls and how to avoid them:
- › Switching before 80% LVR: paying LMI to exit Keystart early is the most expensive mistake. The premium can run to tens of thousands of dollars on a Perth property and sits on the loan for years, eroding the rate saving you were switching to capture.
- › Underestimating the Urban Connect repayment: borrowers in the shared equity scheme sometimes budget on the original equity share amount rather than its current market value. If the property has grown, the repayment is proportionally larger.
- › Applying to the wrong lender first: not every mainstream lender assesses Keystart refinances the same way. A decline on the wrong lender sits on your credit file and makes the next application harder. Choosing which lender to approach first is worth doing carefully.
- › Ignoring serviceability changes: income that's changed since the Keystart application, or new debts taken on since, can make the mainstream serviceability test harder than expected. Running the numbers before you apply avoids a surprise at assessment.
Frequently Asked Questions
Does Keystart charge an exit fee when you refinance out?
No, Keystart's standard Low Deposit Home Loan has no exit fee or early repayment penalty. Your costs at refinance come from the new lender's side and from government discharge and registration fees, not from Keystart.
How much equity do you need to refinance out of Keystart in Perth?
Most mainstream lenders want at least 20% equity, which is an LVR at or under 80%, before they'll approve a Keystart refinance without LMI. Some specialist lenders will go higher, but the rate and terms are usually less competitive above 80%.
What happens to the Urban Connect Shared Equity when you refinance?
The Housing Authority's equity share is repaid in full at refinance, calculated on the property's current market value at that time. If the property has grown since you bought, the repayment amount will be higher in dollar terms than the original shared amount.
Can you refinance out of Keystart if your income has changed?
Yes, but the mainstream lender will assess your current income, not what you earned when you took out the Keystart loan. If your income is lower or less stable now, it's worth a conversation before you apply to understand which lenders will work for your situation.
Is a mortgage broker useful when refinancing out of Keystart?
A mortgage broker, every time. Not every lender assesses Keystart refinances the same way, and applying to the wrong one first can leave a decline on your credit file. A broker identifies which lenders will approve your application before you apply.
Can you refinance out of Keystart if you're in the Urban Connect Shared Equity scheme?
Yes, you can refinance, but the Housing Authority's equity share must be repaid at settlement. You'll need enough equity or savings to cover both the new loan and the shared equity repayment, which is why understanding your current property value matters first.
Your Next Steps
Refinancing out of Keystart is a decision that pays to get right the first time. Moving too early costs you in LMI; moving at the right point puts you on a mainstream loan with better features and the ability to build equity without the transitional lender's income restrictions sitting over you.
The right lender for this transition depends on your situation, and that's a conversation worth having. Talk to the Launch Finance team or call 08 9367 4222, and we'll compare your options across 60+ lenders.
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External Resources
Launch Finance · Perth, WA · Launch Finance Pty Ltd (ABN 17 163 528 701), Corporate Credit Representative 454041 of BLSSA Pty Ltd (ABN 69 117 651 760), Australian Credit Licence 391237 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
