Car Loan Into Mortgage? Gain Control Fast (2026)

Are you feeling burdened by multiple loans and wondering if consolidating your car loan into your mortgage could be a smart financial move? With interest rates on car loans often higher than mortgage rates, this could potentially save you money in the long run. Let's explore whether this option is suitable for you and how you can go about it.

Understanding the Basics of Consolidating a Car Loan into a Mortgage

Before diving into the process, it's essential to understand what it means to roll your car loan into your mortgage. Essentially, this involves refinancing your home loan to include the balance of your car loan. By doing so, you might benefit from the typically lower interest rates associated with mortgages compared to car loans. However, this also means that your car debt will be spread over the life of your home loan, potentially increasing the total interest paid.

Current Market Rates and Requirements

As of 2026, Australian mortgage interest rates generally range from 5.25% to 6.75%, depending on the lender and your financial profile. In contrast, car loans can have interest rates ranging from 6.49% to 12% or higher. By consolidating, you could take advantage of the lower mortgage rates.

Eligibility for refinancing to consolidate loans typically requires a good credit score, sufficient equity in your home, and a stable income. Lenders will assess your ability to meet the higher mortgage repayments that will result from the increased loan amount.

Loan Type	Interest Rate Range	Typical Loan Term
Mortgage	5.25% - 6.75%	25-30 years
Car Loan	6.49% - 12%	5-7 years

Steps to Consolidate Your Car Loan into Your Mortgage

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

1. Evaluate Your Finances: Start by assessing your current financial situation. Calculate the remaining balance on your car loan and determine if you have enough equity in your home.
2. Check Your Credit Score: A healthy credit score will improve your chances of getting a favourable mortgage rate. Obtain your credit report and resolve any discrepancies.
3. Consult a Mortgage Broker: Leverage Esteb and Co's access to 83+ lenders to find a refinancing option that suits your needs. Our experts can guide you through the complexities of loan consolidation.
4. Apply for Refinancing: Once you've selected a lender, apply for refinancing. This will involve submitting financial documents, proof of income, and details of your current loans.
5. Close on the Loan: If approved, your lender will pay off your existing car loan, and your mortgage will be adjusted to reflect the new balance. Make sure to understand the terms and conditions of your new loan agreement.

Expert Tips and Considerations

While consolidating loans can be beneficial, there are several factors to consider:

• Long-Term Costs: While your monthly payments might decrease, extending your car debt over the life of your mortgage means paying more interest overall.
• Home Equity: Ensure you maintain sufficient equity in your home to avoid issues like Lenders Mortgage Insurance (LMI), which could add to your costs.
• Financial Discipline: Be mindful of not accumulating more debt on top of the consolidated amount. This strategy works best when paired with disciplined financial management.
• Early Repayment: If possible, consider making additional payments to pay off the added car loan amount faster, thus reducing the interest paid over time.

Frequently Asked Questions

• Can I consolidate my car loan with any mortgage?
  Not all mortgages allow for consolidation. It's essential to check with your lender or a broker like Esteb and Co to explore available options.
• Will consolidating my car loan affect my credit score?
  Refinancing may temporarily impact your credit score, but consistent repayments can improve it over time.
• Is there a penalty for paying off my car loan early?
  Most car loans do not have early repayment penalties, but it's wise to confirm with your lender.
• How much equity do I need to consolidate my car loan?
  Typically, lenders prefer that you have at least 20% equity in your home.
• What happens if I sell my car after consolidation?
  Selling your car does not impact your consolidated mortgage. However, you will still owe the total refinanced amount.
• Can I refinance with bad credit?
  While challenging, it may still be possible to refinance with bad credit, but rates may be higher. Consulting a broker can help navigate this situation.