Merge Personal Loan? Here's How to Gain Control (2026)

Are you juggling multiple loans and feeling overwhelmed by the financial strain? If you're considering merging your personal loan with your home loan, you're not alone. Many Australians are exploring this option to simplify their finances and potentially reduce their monthly repayments. But is it the right move for you? Let's dive into the details and find out.

Understanding Merging Loans

Merging a personal loan with a home loan, commonly referred to as loan consolidation, involves combining your debts into a single home loan facility. This can lead to a lower interest rate and a simplified repayment schedule. However, it's essential to understand how this process works and its implications on your financial health.

Home loans typically offer lower interest rates compared to personal loans due to the secured nature of the debt. As of 2026, home loan interest rates in Australia range from 4.5% to 6.5%, while personal loan rates can vary significantly, generally between 6.49% and 12% depending on the lender and your creditworthiness.

Current Rates and Requirements

When considering merging your personal loan with your home loan, it's crucial to evaluate current interest rates, lender requirements, and available options. At Esteb and Co, we have access to over 83 lenders, providing a wide array of choices to suit your needs.

Eligibility criteria for merging loans generally include having sufficient equity in your home, a stable income, and a good credit score. It's also important to consider any fees or charges associated with refinancing, such as exit fees for your current loans or establishment fees for the new loan.

Steps to Merge Your Loans

If you've decided that merging your personal loan with your home loan is the right step, here's a practical guide to help you through the process:

1. Evaluate Your Financial Situation: Assess your current debts, interest rates, and monthly repayments. Determine your financial goals and how merging loans can help you achieve them.
2. Check Your Home Equity: Calculate the equity in your home. You'll need sufficient equity to cover the personal loan amount.
3. Research Lenders: Use Esteb and Co's network of 83+ lenders to find competitive rates and terms that suit your needs.
4. Prepare Documentation: Gather necessary documents, such as income statements, credit reports, and loan details.
5. Apply for Refinancing: Submit your application with your chosen lender. Be prepared for a valuation of your property and a credit assessment.
6. Review the Offer: Carefully review the loan offer, including the interest rate, fees, and repayment terms.
7. Proceed with Settlement: If satisfied, proceed with the settlement of the new loan, ensuring all existing debts are paid off.

Tips and Considerations

Before finalising your decision, consider the following expert tips:

• Long-term Costs: While merging loans can lower your monthly repayments, extending the loan term may increase the total interest paid over time.
• Exit Fees: Check for any exit fees on your existing loans and factor these into your cost-benefit analysis.
• Future Flexibility: Consider whether a fixed or variable interest rate best suits your future financial plans.
• Professional Advice: Consult with a mortgage broker from Esteb and Co to ensure the decision aligns with your overall financial strategy.

Frequently Asked Questions

• Can I merge any type of personal loan with my home loan?
  Yes, most types of personal loans can be consolidated into a home loan, provided you have sufficient equity and meet the lender's criteria.
• Will merging loans improve my credit score?
  Potentially, as it can reduce your credit utilisation ratio and simplify your debt. However, it's crucial to maintain timely repayments.
• How does equity affect my ability to merge loans?
  The amount of equity in your home determines how much of a loan you can consolidate. More equity generally allows for more consolidation.
• Are there any risks involved in merging loans?
  Yes, including the risk of extending your debt term and increasing total interest costs. It's important to weigh these against the benefits.
• How long does the loan merging process take?
  The process typically takes several weeks as it involves property valuation, credit assessment, and settlement procedures.
• What if interest rates rise after I merge my loans?
  If you're on a variable rate, your repayments may increase. Consider fixing part or all of your loan to mitigate this risk.
• Can self-employed individuals merge their loans?
  Yes, but self-employed individuals may face additional documentation requirements to prove income stability.