Car Loan with Mortgage? Discover Relief Fast (2026)

As an Australian homeowner, you might be wondering if you can add a car loan to your mortgage. Whether you're looking to streamline your debts, lower your overall interest rate, or simply consolidate your financial obligations, combining these loans can seem like an attractive option. However, it's essential to understand the implications and processes involved.

Understanding Adding a Car Loan to Your Mortgage

When we talk about adding a car loan to your mortgage, we're essentially discussing the concept of debt consolidation. This means combining your car loan with your home loan, so you make a single monthly repayment instead of two. The main appeal lies in potentially lowering your interest payments and simplifying your financial commitments.

Debt consolidation can be beneficial if your mortgage interest rate is significantly lower than your car loan rate. In Australia, car loans typically have higher interest rates compared to mortgages. For example, while car loan rates in 2026 range from 6.49% to 12%, home loan rates might be as low as 5% to 7% depending on your credit profile and lender.

Rates, Requirements, and Options

Before deciding to add your car loan to your mortgage, it's crucial to compare the current rates and understand the requirements. Here's a brief overview:

When you combine your car loan with your mortgage, the car debt gets spread over the life of your home loan. This can lower your monthly payments but may result in paying more interest over the term. Here are the key requirements and options you need to consider:

• Home Equity: You must have enough equity in your home to cover the car loan.
• Credit Score: A good credit score improves your chances of securing a favourable interest rate.
• Lender Approval: Not all lenders allow debt consolidation of this nature, so it's essential to consult with your mortgage broker, such as Esteb and Co, which has access to over 83 lenders.

How to Add a Car Loan to Your Mortgage

Adding a car loan to your mortgage involves a few key steps:

1. Assess Your Equity: Calculate the equity in your home. This is the difference between your property's market value and your current mortgage balance.
2. Review Your Finances: Ensure you have a stable income and a good credit score to qualify for refinancing.
3. Consult a Mortgage Broker: Reach out to a qualified mortgage broker, like those at Esteb and Co, to explore your refinancing options.
4. Apply for Refinancing: Once you choose a lender, submit your refinancing application. This process may require property valuation and credit checks.
5. Settle the Loans: If approved, the new loan will pay off your existing car loan and adjust your mortgage balance accordingly.

Tips and Considerations

Before proceeding with this financial move, consider the following expert tips:

• Calculate Total Interest Costs: Although you may lower your monthly payments, consider the total interest you'll pay over the extended loan term.
• Consider Loan Features: Ensure your new loan includes features you may need, such as offset accounts or flexible repayment options.
• Plan for the Long Term: Extending your car loan over a 20-30 year mortgage term might not be suitable if you're planning early retirement or significant financial changes.
• Seek Professional Advice: Always seek advice from a financial advisor or mortgage broker to ensure this move aligns with your financial goals.

Frequently Asked Questions

1. Can I add a car loan to my mortgage with any lender? Not all lenders permit this type of consolidation. It's essential to consult with a mortgage broker who can help you navigate options across multiple lenders, such as Esteb and Co's 83+ lender panel.
2. Will adding a car loan to my mortgage affect my credit score? Refinancing can temporarily impact your credit score due to credit inquiries, but regular repayments will improve your score over time.
3. How does this affect my mortgage term? Adding a car loan to your mortgage will spread the car debt over the life of your mortgage, which may extend your repayment period.
4. Is debt consolidation right for everyone? Debt consolidation is not suitable for everyone. It depends on your financial situation, goals, and the interest rates involved.
5. What if my home value decreases? If property values drop, you may end up with less equity, complicating future refinancing or selling options.
6. Are there fees involved in refinancing? Yes, refinancing can involve costs such as application fees, valuation fees, and break fees. It's crucial to weigh these against potential savings.
7. Can I still sell my car if it's part of my consolidated mortgage? Yes, but selling your car won't automatically reduce your mortgage balance. You might need to refinance again or make additional payments to adjust your loan balance.