Car Loan and Mortgage – Get Approved Fast (2026)

Dreaming of owning a home but worried that your existing car loan might stand in the way of securing a mortgage? You're not alone. Many Australians face this dilemma, especially as living costs and financial commitments continue to rise. But don't worry, getting a mortgage while having a car loan is entirely possible. With the right guidance and strategies, you can navigate these financial waters successfully.

Understanding Mortgages and Car Loans

Before diving into the specifics, it's essential to grasp the basic concepts of mortgages and car loans. A mortgage is a secured loan used to purchase property, where the property itself acts as collateral. Car loans, on the other hand, are typically smaller secured loans used to purchase a vehicle, with the car serving as collateral. Both involve monthly repayments, interest rates, and can impact your credit score.

In 2026, the Australian housing market remains competitive, with interest rates for home loans ranging from 6.49% to 12%, depending on your financial profile and lender. Car loans often have slightly higher rates, typically between 7% and 15%. It's crucial to understand how these debts interact and influence your borrowing capacity.

Mortgage and Car Loan: Rates, Requirements, and Options

When applying for a mortgage while having a car loan, several factors come into play. Lenders assess your debt-to-income ratio, credit score, and overall financial health to determine your eligibility. Here's a breakdown of what you need to know:

Esteb and Co's access to over 83 lenders provides a wealth of options tailored to various financial situations, ensuring you find the best fit for your needs.

Steps to Secure a Mortgage with an Existing Car Loan

Securing a mortgage while managing a car loan involves careful planning and execution. Follow these steps to enhance your chances of approval:

1. Evaluate Your Finances: Calculate your total monthly expenses, including your car loan repayment, to understand your debt-to-income ratio.
2. Check Your Credit Score: Obtain your credit report and address any discrepancies. Aim for a score of 650 or higher for better rates.
3. Reduce Other Debts: Pay down high-interest debts where possible to improve your financial profile.
4. Save for a Larger Deposit: A larger deposit can offset the risk lenders perceive due to your car loan.
5. Consult a Mortgage Broker: With access to a broad panel of lenders, brokers from Esteb and Co can help find favourable terms for your situation.
6. Pre-Approval: Seek pre-approval to understand your borrowing capacity and demonstrate commitment to potential sellers.
7. Choose the Right Lender: Compare offers from multiple lenders to secure the best rates and terms.

Tips and Considerations

Here are some expert tips to consider during your mortgage journey:

• Consider Refinancing: If your car loan has a high interest rate, refinancing it could lower your repayments, freeing up cash for mortgage purposes.
• Negotiate: Don’t hesitate to negotiate terms with lenders, especially if you have a strong credit score.
• Budget for Unexpected Costs: Home buying involves additional costs such as stamp duty, insurance, and legal fees. Factor these into your budget.
• Stability Matters: Lenders prefer stable employment history, so any recent job changes might affect your application.
• Future-Proof Your Finances: Consider potential future expenses, like family planning or career changes, when assessing your repayment ability.

Frequently Asked Questions

Here are some common questions regarding mortgages and car loans:

• Can I still get a mortgage if my car loan is new?
  Yes, but recent large debts can impact your debt-to-income ratio. Ensure other financial aspects are strong to mitigate this.
• How does a car loan affect my borrowing capacity?
  It reduces your borrowing capacity by adding to your monthly debt obligations. A lower balance or shorter term can help.
• Is it better to pay off my car loan before applying for a mortgage?
  If possible, yes, as it improves your financial profile. However, this isn't always necessary if you manage your debt well.
• Will my car loan interest rate affect my mortgage rate?
  No, but both rates contribute to your overall financial burden, influencing lender decisions.
• Can I consolidate my car loan into my mortgage?
  Some lenders offer this option, which might lower your overall monthly repayments but could extend the term and increase total interest paid.
• Does having a car loan affect my credit score?
  Maintaining regular repayments positively impacts your credit score. Missed payments do the opposite.
• How does Esteb and Co help in this process?
  With access to a wide range of lenders, Esteb and Co can find competitive mortgage options tailored to your unique financial situation.