Personal Loan to Mortgage? Simplify Payments Fast (2026)

Many Australians find themselves juggling multiple debts, and the appeal of simplifying finances by consolidating debts into a single payment is undeniable. If you're wondering whether you can add a personal loan to your mortgage, you're not alone. It's a common question for those seeking to streamline their debts, reduce interest rates, or improve cash flow. But is it the right move for you?

Understanding Debt Consolidation

Debt consolidation involves combining multiple debts into one, ideally with a lower interest rate. By adding a personal loan to your mortgage, you could potentially reduce your monthly repayments and save on interest over time. However, this decision requires careful consideration of your financial situation, the terms of your current mortgage, and the implications of extending your mortgage term.

Rates, Requirements, and Options

When considering adding a personal loan to your mortgage, it's crucial to thoroughly understand the current market conditions and the options available to you.

As of 2026, mortgage interest rates in Australia range from approximately 5.5% to 6.5%, depending on the lender and your credit profile. In contrast, personal loan rates can vary significantly, typically from 6.49% to 12% or more. Consolidating under a mortgage could mean accessing lower interest rates, but it also means committing to a longer repayment term.

Eligibility criteria for refinancing or consolidating debts into a mortgage typically include a stable income, a good credit score, and sufficient equity in your home. Each lender may have specific requirements, which is where Esteb and Co can assist, leveraging our panel of 83+ lenders to find suitable options for your unique situation.

Steps to Add a Personal Loan to Your Mortgage

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

1. Assess Your Financial Situation: Review your debts, interest rates, and repayment terms. Determine your financial goals and whether consolidation aligns with them.
2. Check Your Home's Equity: Calculate how much equity you have in your home. Equity is crucial as it determines how much you can borrow against your mortgage.
3. Consult with a Mortgage Broker: Contact Esteb and Co to explore options tailored to your needs. Our brokers will help you understand the implications of refinancing and present offers from our 83+ lender panel.
4. Apply for Refinancing: Once you've chosen the best option, proceed with the application process. Prepare necessary documentation, such as proof of income and current loan statements.
5. Close on the Loan: Once approved, complete the loan closure process. Your broker will guide you through the final steps, including settling existing debts.

Expert Tips and Considerations

Before consolidating your personal loan into your mortgage, consider the following tips:

• Long-Term Costs: While monthly repayments might decrease, extending your mortgage term could increase overall interest costs.
• Impact on Equity: Using your home equity reduces your ownership stake. Ensure you retain sufficient equity for future needs, such as renovations or emergencies.
• Budgeting: Include all costs in your budget, such as refinancing fees, legal costs, and any penalties for paying off existing loans early.
• Interest Rate Forecasts: Stay informed about potential interest rate changes. Even small increases can significantly impact long-term costs.
• Financial Discipline: Avoid accumulating new debt after consolidation to prevent falling back into a cycle of debt.

Frequently Asked Questions

1. Can I add a personal loan to my mortgage with bad credit?
   Refinancing with bad credit may be challenging, but not impossible. Lenders assess risk, and a mortgage broker like Esteb and Co can help identify suitable options based on your credit profile.
2. Will adding a personal loan to my mortgage affect my credit score?
   Initially, your credit score may dip due to the credit inquiry and new loan account. However, consistent repayments can positively impact your score over time.
3. What are the upfront costs of refinancing?
   Costs may include application fees, valuation fees, and legal charges. It's crucial to weigh these against potential savings.
4. How long does the refinancing process take?
   The process can take several weeks, depending on the complexity of your situation and lender requirements.
5. Is it better to consolidate all debts into a mortgage?
   This depends on interest rates, repayment terms, and your financial goals. A mortgage broker can provide personalised advice.
6. Can I refinance again in the future?
   Yes, refinancing again is possible, especially if your financial situation changes or interest rates become more favourable.
7. Are there any tax implications?
   In Australia, there are generally no tax benefits for consolidating personal debts into a mortgage, unlike investment property loans where interest may be tax-deductible.