Combine Car Loan & Mortgage? Unlock Savings Now

Are you juggling multiple loans and wondering if there's a way to streamline your payments? Combining your car loan with your mortgage could be the solution you're seeking. With the right strategy, you can potentially lower your monthly payments and simplify your financial obligations. Let's delve into whether this is a viable option in today's market and how you can make it work for you.

Understanding Combining Loans

Combining your car loan with your mortgage involves refinancing your mortgage to include the balance of your car loan. This means you consolidate two debts into one, secured against your property. It's an appealing option for those looking to reduce monthly commitments and manage interest rates more effectively. However, it's essential to understand how this impacts your financial situation and what it entails in terms of long-term costs.

Current Market Rates and Requirements

As of 2026, mortgage interest rates in Australia typically range from 5.5% to 7.5%, depending on your lender and financial profile. Car loans, on the other hand, can have rates ranging from 6.49% to 12%. By consolidating, you might benefit from the lower mortgage rates, but it's crucial to consider the overall cost over time.

Eligibility criteria for refinancing to include a car loan generally require a good credit score, stable income, and sufficient equity in your home. Lenders will assess your ability to manage the increased mortgage amount, and your overall debt-to-income ratio will be a significant factor.

Steps to Combine Your Car Loan with Your Mortgage

Here’s a step-by-step guide to help you through the process:

1. Assess Your Financial Situation: Consider your current debts, interest rates, and financial goals. Determine if the potential savings outweigh the costs.
2. Check Your Equity: Ensure you have enough equity in your home to cover both the remaining mortgage balance and the car loan.
3. Consult with a Mortgage Broker: At Esteb and Co, we have access to 83+ lenders, offering a range of refinancing options. Our experts can help you find the best deal tailored to your needs.
4. Apply for Refinancing: Submit your application with the help of your broker. You'll need to provide financial documents, such as proof of income and details of your current loans.
5. Review and Sign Documents: Once approved, carefully review all terms and conditions before signing to ensure you understand the new loan structure.
6. Close Your Car Loan: Use the funds from your refinanced mortgage to pay off your car loan completely, consolidating your debts into one.

Tips and Considerations

Before making a decision, consider these expert tips:

• Longer Loan Term: Extending the car loan over the life of a 30-year mortgage can increase the total interest paid. Weigh the immediate savings against the long-term cost.
• Interest Rate Changes: Keep in mind that mortgage rates can fluctuate. Ensure you’re comfortable with potential rate hikes that could affect your monthly payments.
• Loan Security: Remember, your home secures the new loan. If you default, you risk foreclosure, so ensure the new arrangement is sustainable.
• Professional Advice: Consulting with a mortgage broker, like those at Esteb and Co, can provide insights into the best options available from our extensive lender panel.

Frequently Asked Questions

1. Can combining my loans save me money?

Yes, it can potentially reduce your monthly payments, but consider the long-term interest costs. It's important to do the math or consult a broker.

2. Is my credit score important?

Absolutely. A good credit score increases your chances of securing a favourable rate when refinancing your mortgage.

3. What if I have limited equity?

If your home equity is insufficient, you might not be eligible to consolidate your loans. A broker can help you explore other options.

4. How long does the refinancing process take?

Typically, it can take 4-6 weeks, depending on the lender and complexity of the refinance.

5. Are there fees involved?

Yes, there may be fees for refinancing, such as application and settlement fees. It's important to factor these into your decision-making process.

6. Can I refinance with bad credit?

It can be more challenging, but not impossible. A broker can help you find lenders that offer refinancing options for those with less-than-perfect credit.

Combining your car loan with your mortgage can be a strategic financial move, but it's crucial to approach it with a clear understanding of the implications. With expert guidance from Esteb and Co's network of lenders, you can make an informed decision that aligns with your financial goals.