Home Loan with Personal Loan? Discover Your Path (2026)
Worried about juggling loans? Learn how to secure a home loan even with a personal loan. Find real solutions fast. Explore options today!
For many Australians, owning a home is a significant milestone. However, existing debts, such as personal loans, can complicate the path to securing a home loan. If you find yourself asking, "Can I get a home loan with a personal loan?" you're not alone. This concern is common, but the good news is that there are solutions available. Whether you're concerned about your borrowing capacity or worried about how your debt might affect your loan application, understanding your options can pave the way to home ownership.
Understanding Home Loans and Personal Loans
Before delving into the interplay between home loans and personal loans, it's essential to understand what each entails. A home loan, also known as a mortgage, is a long-term loan used to purchase property. These loans typically come with lower interest rates compared to other types of loans, given their secured nature—meaning the property itself acts as collateral.
On the other hand, a personal loan is usually unsecured and can be used for a variety of purposes, from consolidating debt to funding personal expenses. Due to the lack of collateral, personal loans often come with higher interest rates, usually ranging from 6.49% to 12% in the current market.
When you're juggling both types of loans, lenders will assess your financial health by considering your total debt obligations, income, and credit history to determine your borrowing capacity.
Current Market Rates and Requirements
In 2026, the Australian lending market is experiencing fluctuating interest rates, influenced by global economic conditions. As of now, home loan interest rates range between 4.5% and 6.5%, depending on the lender and the borrower’s financial profile.
Lenders will scrutinise your financial situation, including existing personal loans, when you apply for a home loan. Here are key requirements you need to consider:
- Debt-to-Income Ratio (DTI): Lenders prefer a DTI ratio below 36%. If you have a personal loan, it will be factored into this calculation.
- Credit Score: A score above 620 is typically favourable, but higher scores can secure better rates.
- Deposit: A minimum deposit of 5%–20% of the property value is often required.
- Stable Income: Proof of consistent income is crucial for demonstrating your ability to meet repayments.
| Lender Type | Interest Rates | Minimum Deposit |
|---|---|---|
| Traditional Banks | 4.5% - 6.0% | 10% - 20% |
| Credit Unions | 4.7% - 6.2% | 5% - 15% |
| Online Lenders | 4.8% - 6.5% | 5% - 10% |
Steps to Secure a Home Loan with a Personal Loan
Navigating the home loan process with existing personal debt involves strategic planning. Here’s a step-by-step guide:
- Review Your Financial Health: Calculate your total monthly debt obligations, including your personal loan. Ensure your income comfortably covers these payments.
- Improve Your Credit Score: Pay down existing debts where possible and ensure all payments are made on time to boost your credit rating.
- Consult with a Mortgage Broker: Reach out to a professional, like those at Esteb and Co, who have access to 83+ lenders and can offer tailored advice.
- Get Pre-Approval: This gives you a clear idea of how much you can borrow and strengthens your position when making offers on properties.
- Consider Debt Consolidation: If your personal loan has a high interest rate, consolidating it with other debts might improve your financial profile.
- Prepare Documentation: Gather necessary documents, including proof of income, credit reports, and details of your personal loan.
Tips and Considerations
Securing a home loan with an existing personal loan requires careful consideration and planning. Here are some expert tips:
- Budget Wisely: Consider potential interest rate rises in your budget planning to ensure you can manage repayments even if rates increase.
- Explore Lender Options: With over 83 lenders in our network, Esteb and Co can help identify less conventional lenders who might be more flexible with existing debts.
- Increase Your Deposit: A larger deposit can offset the impact of existing debts, potentially improving your loan terms.
- Seek Professional Advice: A mortgage broker can provide insights into lender criteria and how best to present your financial situation.
Frequently Asked Questions
- Can I get a home loan if I have a personal loan?
- Yes, it's possible to secure a home loan with a personal loan, but it may affect your borrowing capacity and interest rates.
- What is the debt-to-income ratio?
- The debt-to-income ratio is a measure that compares your total monthly debt payments to your gross monthly income.
- How can I improve my chances of getting a home loan?
- You can improve your chances by reducing your existing debts, improving your credit score, and providing a larger deposit.
- Will consolidating my personal loan help?
- Consolidating high-interest debts can improve your financial profile by lowering your monthly obligations, making you more attractive to lenders.
- How does a mortgage broker help?
- A mortgage broker can provide access to a wide range of lenders and tailor advice based on your unique financial circumstances.
- Should I pay off my personal loan before applying for a home loan?
- While paying off your personal loan can improve your borrowing capacity, it's not always necessary. Consider discussing your options with a mortgage broker.
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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.