Combine Car and Home Loans? Discover Your Savings (2026)

You're juggling multiple loans, feeling the pinch of monthly repayments, and wondering if there's a more streamlined solution. If you've found yourself questioning whether you can combine your car and home loans, you're not alone. Many Australians are exploring ways to simplify their finances and potentially save money. Let's dive into whether combining these loans is a viable option for you.

Understanding Loan Combination

Combining loans essentially means merging two separate loans into one, ideally with better terms. This is often referred to as loan consolidation. In the context of car and home loans, it involves refinancing your home to include the outstanding balance of your car loan. The primary goal is to reduce the complexity of managing multiple loans, potentially lower your monthly repayments, and take advantage of possible cost savings.

Rates, Requirements, and Options

When considering combining car and home loans, it's crucial to understand the current market conditions and what lenders typically require.

The interest rates for home loans in Australia as of 2026 range from approximately 6.49% to 8.75%, depending on your financial profile, loan amount, and lender policies. Car loans, on the other hand, generally carry higher rates, ranging from 7.5% to 12%.

To combine these loans, the lender will typically assess your creditworthiness, the equity in your home, and your ability to meet the revised repayments.

Options for combining loans include refinancing your home loan to pay off the car loan, or taking a home equity loan to cover the car loan balance. With a panel of 83+ lenders, Esteb and Co can help you explore the best refinancing options tailored to your financial situation.

Steps to Combine Your Car and Home Loans

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

1. Assess Your Financial Situation: Calculate your total outstanding debts, current interest rates, and repayment schedules. This will help you understand your current financial commitments.
2. Check Your Home Equity: The equity in your home will determine how much you can borrow. Generally, lenders allow you to borrow up to 80% of your home's value.
3. Research Lenders: Consider lenders that offer competitive interest rates and favourable terms. Esteb and Co can provide access to a wide range of lenders to find a good match.
4. Apply for a Refinance: Submit your refinance application with the required documentation, including proof of income, current loan statements, and identification.
5. Approval and Settlement: Upon approval, the lender will pay off your existing car loan, and you'll start making repayments on the new consolidated loan.
6. Review Your Budget: Adjust your budget to accommodate the new repayment schedule and ensure it aligns with your financial goals.

Tips and Considerations

Combining your car and home loans can offer significant benefits, but it's not without its drawbacks. Here are some tips and considerations:

• Longer Loan Term: While consolidating can lower your monthly payments, it may extend the duration of your car loan, leading to more interest paid over time.
• Fees and Charges: Be aware of any exit fees on your current loans and setup fees for the new loan. These can add to the cost of consolidation.
• Financial Discipline: Ensure you're disciplined with the savings from reduced repayments. Avoid accumulating additional debt.
• Consult a Professional: Seek advice from a mortgage broker, like those at Esteb and Co, for tailored advice on whether loan consolidation suits your needs.

Frequently Asked Questions

1. Can I combine any type of loan with my home loan? Generally, you can consolidate various debts such as personal loans and credit cards with your home loan, depending on the lender's policies and your financial situation.
2. Will consolidating loans affect my credit score? Initially, there may be a small impact on your credit score due to the credit inquiry, but over time, it can improve if you make regular repayments.
3. Is it cheaper to pay off car loans separately? This depends on your current interest rates and loan terms. A professional can help you analyse your situation.
4. How does refinancing impact my home loan? Refinancing can change your interest rate, loan term, and monthly payments. It's important to ensure these changes align with your financial goals.
5. Are there risks involved in combining loans? Yes, such as longer repayment terms and increased total interest paid. It's crucial to weigh these against potential savings.
6. Can I revert to separate loans after consolidation? Generally, once loans are consolidated, they can't be separated again, but you can refinance to different terms if needed.
7. What documents do I need to consolidate loans? You'll need proof of income, identification, current loan statements, and details of your debts and assets.