Add Car to Home Loan? Save Money Fast (2026)

Buying a car can be an exciting yet daunting experience, especially when it comes to financing. One question that often pops up is whether it's possible to add a car purchase to your home loan. If you're trying to figure out if this is a viable option for you, you're not alone. With interest rates and living costs on the rise, combining your car and home loan could seem like an attractive way to manage and reduce monthly repayments.

Understanding Adding a Car to Your Home Loan

When you consider adding a car purchase to your home loan, you're essentially looking to refinance your home loan to include the cost of the car. This approach can streamline your debts into one manageable loan, potentially offering a lower interest rate compared to standard car loans. However, it also means you're increasing the principal amount of your home loan, which can affect your interest and repayment terms over the long term.

Interest Rates, Requirements, and Options

Interest rates are a crucial factor to consider. As of 2026, the average home loan interest rate in Australia ranges from 6.49% to 12%, depending on your lender and loan type. Car loans, on the other hand, often come with higher rates, typically between 8% and 15%. By adding your car to your home loan, you might lock in a lower rate for the purchase of the car.

However, there are eligibility criteria and requirements to meet. You'll need to have sufficient equity in your home, a good credit score, and the ability to meet the repayment terms of a larger loan amount. Lenders will assess your financial stability, and not all lenders may offer this option. At Esteb and Co, with access to 83+ lenders, we can help identify those willing to accommodate such a refinancing option.

Steps to Adding a Car to Your Home Loan

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

1. Assess Your Equity: Calculate how much equity you have in your home. This is the current market value of your property minus the outstanding loan balance. More equity means better chances of approval.
2. Check Your Credit Score: A higher credit score increases your chances of getting a favourable interest rate. Obtain a copy of your credit report to ensure there are no errors.
3. Consult Your Mortgage Broker: Engage a professional, like those at Esteb and Co, to explore your options with their panel of over 83 lenders.
4. Get a Valuation: Your lender may require a formal valuation of your property to confirm the equity available.
5. Submit a Refinancing Application: Prepare your documents, including proof of income, expenses, and assets, then apply for refinancing.
6. Negotiate Terms: Work with your broker to negotiate the best possible terms and interest rate.
7. Complete the Process: Once approved, your existing home loan will be refinanced to include the car loan amount.

Tips and Considerations

Before proceeding, consider these expert tips:

• Long-Term Costs: While you might benefit from a lower interest rate, extending the term of your car loan means you could pay more interest over the life of the loan.
• Loan-to-Value Ratio (LVR): Adding a car to your home loan increases your LVR. Lenders typically prefer an LVR under 80% for refinancing.
• Risk of Repossession: Defaulting on your home loan puts your home at risk, not just the car. Ensure you can manage the repayments comfortably.
• Evaluate Alternatives: Compare the total cost of a separate car loan versus adding it to your home loan. Sometimes, a shorter-term car loan may be financially wiser.
• Consult the Experts: Speak with a mortgage broker to fully understand the impact on your financial situation.

Frequently Asked Questions

1. Can I add a car loan to any home loan? Not all home loans can be refinanced to include a car loan. Consult with your lender or mortgage broker to determine eligibility.
2. How does adding a car to my home loan affect my repayments? While monthly repayments might decrease due to lower interest rates, the total interest paid over time could increase.
3. What are the risks of adding a car to my home loan? The primary risk is extending the loan term, which could lead to higher total interest payments and the potential risk of home repossession if you default.
4. Is it cheaper to finance a car separately? It depends on the interest rates and terms available. A shorter-term car loan might be more cost-effective despite higher rates.
5. Can I pay off the car portion of the loan early? Yes, but check with your lender about potential early repayment fees or additional terms.
6. How does my credit score affect my refinancing application? A higher credit score can result in better interest rates and approval chances.
7. What role does Esteb and Co play in this process? Esteb and Co can help navigate the refinancing process, leveraging their access to 83+ lenders to find the best options for your needs.