Car Loan to Mortgage? Discover Surprising Relief (2026)

Struggling to juggle multiple debts like a car loan and a mortgage can feel overwhelming. You might be wondering if you can simplify your finances by combining these debts. The idea of rolling your car loan into your mortgage could seem appealing, but is it the right move for you? Let's dive into the details to help you make an informed decision.

Understanding Adding a Car Loan to Your Mortgage

Combining a car loan with your mortgage essentially means refinancing your mortgage to include the outstanding amount of your car loan. This process consolidates your debts, potentially resulting in a single, lower monthly repayment. However, it's crucial to understand that while this can provide immediate financial relief, it may not always be the most cost-effective solution in the long term.

Interest Rates, Requirements, and Options

Interest rates for mortgages in Australia as of 2026 typically range from 6.49% to 8% depending on the lender and the borrower's credit profile. Adding a car loan to your mortgage might seem like a good idea if your car loan interest rate is higher, often ranging from 9% to 12% for unsecured loans.

However, there are several factors to consider and requirements to meet:

• Your current mortgage must have sufficient equity to absorb the car loan.
• You must meet the lending criteria of the mortgage provider, which will include an assessment of your income, credit history, and overall financial situation.
• Be aware of the costs involved in refinancing, such as exit fees, break costs, and application fees for the new mortgage.

Steps to Add Your Car Loan to Your Mortgage

1. Evaluate Your Financial Situation: Assess your current debts, income, and expenses to ensure you can handle a potentially larger mortgage payment.
2. Check Your Home Equity: Determine if you have enough equity in your home to cover the outstanding car loan amount.
3. Consult a Mortgage Broker: Speak with a professional, such as those at Esteb and Co, who have access to over 83 lenders, to explore your refinancing options.
4. Apply for Refinancing: Gather necessary documents, such as proof of income and identification, and submit your refinancing application to your chosen lender.
5. Review the Offer: If approved, review the terms of the new mortgage carefully, considering the interest rate, fees, and any changes in repayment terms.
6. Proceed with the Refinance: If you're satisfied with the terms, proceed with the refinancing process to pay off your car loan using your mortgage.

Expert Tips and Considerations

Before deciding to add your car loan to your mortgage, there are several important considerations:

• Long-term Costs: While monthly payments might decrease, extending your car loan over a 20-30 year mortgage can significantly increase total interest paid.
• Potential Fees: Be mindful of refinancing costs that may offset the benefits of rolling your car loan into your mortgage.
• Future Financial Needs: Consider whether refinancing will impact your ability to access future credit or your plans for property ownership.
• Debt Management: Ensure that consolidating your debts doesn't lead to accumulating more debt elsewhere.

Frequently Asked Questions

• Is it a good idea to add my car loan to my mortgage? It depends on your individual financial situation, interest rates, and long-term goals. Consulting a mortgage broker can help you weigh the pros and cons.
• How much equity do I need in my home to add my car loan? Generally, lenders prefer that your total debt remains below 80% of your home's value, but this can vary between lenders.
• What fees are associated with refinancing? Common fees include exit fees from your current loan, application and legal fees for the new loan, and potential valuation fees.
• Will adding my car loan affect my credit score? Refinancing itself might have a temporary impact, but the long-term effects depend on your ability to manage the new loan.
• Can I do this with any lender? Not all lenders offer this option, and terms can vary significantly, which is why consulting with a broker like Esteb and Co is beneficial.
• How long does the refinancing process take? The process can take several weeks, depending on the lender and complexity of your financial situation.