Home Equity Loan & Mortgage: Combine for Better Control (2026)
Feeling stuck with separate loans? Discover how combining them can simplify your finances. Gain control and explore your options today.
In today’s dynamic financial market, homeowners often find themselves exploring various options to make the most of their property investment. One question that has increasingly surfaced is whether you can combine a home equity loan with your mortgage. If you're considering tapping into your home equity, understanding the ins and outs of combining these financial products could be the key to unlocking significant financial benefits.
Understanding Home Equity Loans and Mortgages
Before diving into whether you can combine a home equity loan with your mortgage, it's crucial to understand what each of these financial products entails. A home equity loan allows you to borrow against the equity you've built up in your home. Essentially, it’s a second mortgage, which provides a lump sum of money that you must repay with interest over a fixed term.
On the other hand, a mortgage is a loan used to purchase property. Typically, this is a long-term financial commitment, with terms stretching over 25 to 30 years. As you make payments, you build equity in your home, which is the portion of the property that you truly own.
Current Market Information and Options
As of 2026, the Australian financial market offers a plethora of options from over 83 lenders available through Esteb and Co. When considering combining a home equity loan and mortgage, it’s important to weigh the current interest rates, which range between 6.49% to 12% for home equity loans, with typical mortgage rates around 5.5% to 7%.
Several scenarios might lead a homeowner to consider combining these loans, such as seeking lower interest rates, consolidating debt, or simplifying monthly payments. However, not all financial institutions offer products that allow for combining these loans, so understanding your options is paramount.
| Product | Interest Rate | Term |
|---|---|---|
| Home Equity Loan | 6.49% - 12% | 5 - 15 years |
| Mortgage | 5.5% - 7% | 25 - 30 years |
Steps to Combine Your Home Equity Loan and Mortgage
Combining a home equity loan with your mortgage involves a few careful steps:
- Assess Your Financial Situation: Review your current mortgage and home equity loan terms, interest rates, and remaining balances.
- Research Lenders: With access to over 83 lenders through Esteb and Co, compare the available options to find the best terms and rates for combining your loans.
- Consult a Mortgage Broker: An experienced broker can help navigate the complexities and identify suitable refinancing products.
- Apply for Refinancing: Once you have a lender, submit your application to refinance your existing mortgage and home equity loan into a single loan.
- Close the New Loan: Upon approval, complete the closing process, which includes settling your previous loans and starting your new payment plan.
Tips and Considerations
Combining a home equity loan with a mortgage involves several considerations:
- Evaluate Costs: Refinancing can involve fees and costs. Ensure the long-term savings outweigh the upfront expenses.
- Consider Loan Terms: A longer loan term may reduce monthly payments but could increase the total interest paid over time.
- Check Eligibility: Ensure you meet the lender’s criteria, such as credit score and income requirements.
- Stay Informed: Keep abreast of market changes as interest rates can fluctuate, affecting loan terms and availability.
Frequently Asked Questions
1. Can I really combine a home equity loan with my mortgage?
Yes, it is possible, but it depends on lender offerings and your financial situation.
2. What are the benefits of combining these loans?
Combining loans can result in lower interest rates, simplified payments, and potential savings on interest over the loan term.
3. Are there risks involved?
Yes, such as extending your loan term and incurring additional fees. It's important to weigh these against the benefits.
4. How do I know if I’m eligible?
Eligibility varies by lender, but typically depends on your credit score, income, and equity in the home.
5. What happens if I default on the combined loan?
Defaulting could lead to foreclosure since the home secures the mortgage. It's crucial to ensure affordability before proceeding.
In summary, combining a home equity loan with your mortgage can be a strategic financial move when done correctly. By leveraging the expertise of Esteb and Co and their broad lender panel, you can navigate this process with confidence and make informed decisions that align with your financial goals.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.