Personal Loan – Merge for Relief When Banks Decline

Are you struggling to manage multiple debts and considering rolling your personal loan into your mortgage? This strategy can simplify your finances and potentially save you money on interest. However, it's crucial to weigh the pros and cons and understand the process before making any decisions.

Understanding Adding a Personal Loan to Your Mortgage

Combining your personal loan with your mortgage involves consolidating your debts under one interest rate, which is typically lower than that of personal loans. This means you can potentially reduce your monthly payments and simplify your financial management. However, it's essential to understand that this process involves refinancing your mortgage, which may come with its own set of costs and requirements.

Rates, Requirements, and Options

When considering adding a personal loan to your mortgage, it's important to understand the current market rates and what lenders require. As of 2026, typical mortgage refinance rates in Australia range from 5.25% to 6.75%, while personal loan rates can vary between 6.49% and 12%. By refinancing, you could secure a lower interest rate for your personal loan debt.

Eligibility for refinancing typically requires a stable income, a good credit score, and sufficient home equity. Lenders will also assess your debt-to-income ratio to ensure you can manage the repayments. With Esteb and Co's access to over 83 lenders, we can help you find a solution tailored to your needs.

Steps to Add a Personal Loan to Your Mortgage

1. Assess Your Financial Situation: Review your current debts, income, and expenses to determine whether refinancing makes sense for you.
2. Check Your Credit Score: A higher credit score can help you secure better rates. Consider improving your score before applying for refinancing.
3. Calculate Your Home Equity: Lenders typically require at least 20% equity in your home for a refinance.
4. Consult with a Mortgage Broker: A broker, like those at Esteb and Co, can help you navigate the options available from our panel of 83+ lenders.
5. Apply for Refinancing: Submit your application with the required documentation, such as proof of income and identity.
6. Review and Sign the Loan Agreement: Once approved, carefully review the terms and conditions before signing.
7. Consolidate Your Debts: Use the funds from your refinanced mortgage to pay off your personal loan and any other high-interest debts.

Tips and Considerations

• Beware of Additional Costs: Refinancing can involve fees such as application, legal, and valuation fees. Ensure you account for these in your cost-benefit analysis.
• Consider the Long-Term Impact: While combining your debts can lower monthly payments, it may extend the loan term, potentially increasing the total interest paid over time.
• Factor in Future Financial Goals: Ensure that refinancing aligns with your long-term financial objectives, such as retirement planning or investing.
• Seek Professional Advice: Consulting with a financial advisor or mortgage broker can provide valuable insights and help you make an informed decision.

Frequently Asked Questions

1. Is it possible to add a personal loan to my mortgage?
   Yes, by refinancing your mortgage, you can consolidate your personal loan into it, potentially securing a lower interest rate.
2. What are the benefits of consolidating my debts?
   Consolidating your debts can simplify your finances, reduce monthly payments, and lower your interest rate.
3. Are there risks involved in refinancing my mortgage?
   Yes, potential risks include incurring additional fees and extending your loan term, which could increase the total interest paid.
4. What credit score do I need to refinance my mortgage?
   While requirements vary by lender, a credit score of 620 or higher is often needed to qualify for refinancing.
5. How do I know if refinancing is right for me?
   Assess your financial situation, compare rates, and consult with a mortgage broker to determine if refinancing aligns with your financial goals.
6. How long does the refinancing process take?
   The refinancing process can take anywhere from 30 to 60 days, depending on the lender and your specific circumstances.
7. Can Esteb and Co help me find a suitable refinancing option?
   Yes, with access to 83+ lenders, Esteb and Co can assist in finding a refinancing solution that matches your needs and financial situation.