Consolidate Personal Loan? Here's How to Save Big

Are you feeling overwhelmed by multiple personal loan repayments? You're not alone. Many Australians find themselves juggling several loans, leading to financial stress and uncertainty. If you're wondering whether you can consolidate your personal loan into your mortgage, this guide will provide the answers you need. By doing so, you might achieve lower monthly payments and a clearer financial path. Let's explore how you can make this work for you.

Understanding Loan Consolidation

Loan consolidation is the process of combining multiple debts into a single loan. This can simplify your finances by giving you just one payment to focus on. When you consolidate a personal loan into your mortgage, you're essentially increasing your mortgage balance to pay off other debts. This could mean lower interest rates and extended repayment terms, which might ease your financial burden.

Current Market Rates and Options

In 2026, the Australian mortgage market offers interest rates ranging from 6.49% to 12%, depending on the lender and your personal financial situation. When considering consolidating your personal loan into your mortgage, it's crucial to compare these rates with your current personal loan rates, which might range from 10% to 18% or higher.

Eligibility for consolidating a personal loan into a mortgage generally requires sufficient home equity, a stable income, and a good credit score. Lenders often look for a loan-to-value ratio (LVR) of 80% or less. With access to over 83 lenders, Esteb and Co can help you find the most competitive rates and terms tailored to your situation.

Steps to Consolidate Your Personal Loan into a Mortgage

1. Review Your Financial Situation: Assess your current debts, interest rates, and monthly payments. Determine how much equity you have in your home.
2. Consult with a Mortgage Broker: Engage with a professional, like those at Esteb and Co, who can offer insights into lender options and guide you through the process.
3. Obtain a Property Valuation: Your lender will require a current valuation of your property to determine your available equity.
4. Compare Lender Offers: Look at interest rates, fees, and terms from various lenders. Consider the overall cost of consolidating your loan.
5. Submit Your Application: Provide all necessary documentation, including proof of income, credit history, and property valuation.
6. Finalise the Loan Refinance: Upon approval, your new mortgage will pay off your existing personal loan(s), and you'll begin making payments on the consolidated amount.

Tips and Considerations

• Evaluate Long-term Costs: While a lower monthly payment is attractive, extending your loan term can increase the total interest paid over time.
• Maintain Good Credit: A strong credit score can give you access to better rates and terms.
• Consider Extra Repayments: If possible, make additional payments to reduce your loan balance faster and save on interest.
• Beware of Fees: Be mindful of any fees associated with refinancing, such as exit fees from your current loan or setup fees for the new mortgage.
• Seek Professional Advice: Always consult with a financial advisor to ensure that loan consolidation aligns with your financial goals.

Frequently Asked Questions

Can I consolidate other debts into my mortgage?

Yes, many people consolidate multiple debts, including credit cards and car loans, into their mortgage for simpler management and potentially lower rates.

What are the risks of consolidating into a mortgage?

Extending your debt over a longer term can increase the total interest paid. Additionally, your home is at risk if you fail to meet mortgage repayments.

How does equity affect my ability to consolidate?

You need sufficient equity in your home to increase your mortgage balance. Typically, lenders prefer an LVR of 80% or less.

Will consolidating affect my credit score?

Initially, applying for new credit can impact your score slightly, but over time, simplifying your payments and potentially lowering your total debt may improve your credit profile.

Can I switch lenders during consolidation?

Yes, refinancing with a new lender is possible and may offer better terms. Esteb and Co can assist in comparing lender options from their extensive panel.

Is there a limit to the amount I can consolidate?

The amount you can consolidate depends on your home equity, income, and creditworthiness. Lenders will assess these factors during the application process.

Should I consolidate my personal loan into my mortgage?

This depends on your financial goals and circumstances. Consider consulting with a mortgage broker to evaluate the potential benefits and drawbacks specific to your situation.