Car Loan on Mortgage? Discover Savings Fast (2026)

Are you considering financing a vehicle purchase and wondering if you can roll that car loan into your mortgage? You're not alone. Many Australians are exploring ways to manage their debt more efficiently, and combining a car loan with a mortgage might seem like an appealing option. However, there are several factors to consider to determine if it's the right financial move for you.

Understanding Car Loans and Mortgages

Before deciding to combine your car loan with your mortgage, it's essential to understand the differences between these two types of loans. A car loan is typically a short-term loan designed specifically for purchasing a vehicle, often with a term ranging from three to seven years. In contrast, a mortgage is a long-term loan used to buy property, usually with a term of 25 to 30 years.

Car loans generally have higher interest rates compared to mortgages. In 2026, car loan interest rates in Australia typically range between 6.49% and 12%, whereas mortgage rates are generally lower, ranging from 4.5% to 6%. This difference in rates can make the idea of combining them appealing, as it might reduce your overall interest payments. However, there are other considerations, such as loan terms and total interest paid over time.

Current Rates, Requirements, and Options

When contemplating combining your car loan with your mortgage, it's crucial to consider the current market rates and requirements.

To qualify for combining your car loan into your mortgage, lenders will typically require you to have a certain amount of equity in your home. Equity is the difference between your property's market value and the outstanding balance on your mortgage. Lenders may allow you to access this equity to consolidate your debt, including a car loan.

It's also essential to consider your financial situation and ensure that your credit score and income are sufficient to support the increased mortgage amount. Remember that while Esteb and Co's panel of 83+ lenders offers diverse options, each lender may have specific criteria for such refinancing.

Steps to Combine a Car Loan with a Mortgage

Combining your car loan with your mortgage can be a complex process, but with careful planning, it can be achieved. Here's a step-by-step guide to help you navigate this financial decision:

1. Assess Your Financial Situation: Evaluate your current debts, income, and expenses. Make sure you have enough equity in your home to cover the car loan.
2. Check Your Credit Score: A good credit score can improve your chances of securing favourable terms. Obtain a copy of your credit report and address any issues.
3. Consult with a Mortgage Broker: Reach out to a professional, such as those at Esteb and Co, to explore your options. They can provide tailored advice and help you find a suitable lender from their extensive network of 83+ lenders.
4. Compare Offers: Use the broker's expertise to compare different lenders' offers. Consider interest rates, terms, and any fees associated with refinancing.
5. Apply for Refinancing: Once you've selected a lender, submit your application. Prepare to provide documentation such as proof of income, credit history, and details of your existing mortgage and car loan.
6. Review and Finalise the Agreement: After approval, carefully review the terms of the new mortgage agreement. Ensure that you understand the implications of the new loan structure.
7. Manage Your New Loan: With the car loan now part of your mortgage, adjust your budget to accommodate the new repayment schedule and maintain timely payments.

Tips and Considerations

Combining a car loan with a mortgage can offer several benefits but also comes with potential drawbacks. Here are some expert tips to consider:

• Longer Loan Term: While mortgage rates are lower, extending your car loan over a 25-30 year mortgage can significantly increase the total interest paid on the vehicle.
• Impact on Home Equity: Using your home equity for non-property-related expenses can reduce your equity buffer and potentially affect your financial security.
• Market Fluctuations: Be aware of potential interest rate changes. If rates increase, your monthly payments could rise, impacting your budget.
• Fees and Costs: Consider any fees associated with refinancing, such as exit fees from your current loans or application fees for the new mortgage.
• Consult Professionals: Always seek advice from financial advisors or mortgage brokers like those at Esteb and Co to ensure you make informed decisions.

Frequently Asked Questions

1. Can I combine a car loan with any type of mortgage? It depends on the lender's policies and your financial situation. Consult with a mortgage broker to explore your options.
2. How much equity do I need to combine a car loan with my mortgage? Generally, lenders prefer you to have at least 20% equity in your home, but this can vary.
3. Will combining my car loan with my mortgage affect my tax situation? Typically, the interest on a mortgage used for personal expenses, like a car, is not tax-deductible. Consult a tax advisor for more information.
4. Are there risks involved with combining these loans? Yes, extending the car loan over a longer period can increase total interest costs, and using home equity reduces your ownership stake in the property.
5. How does this affect my monthly payments? While your interest rate may decrease, the overall debt amount increases, potentially impacting monthly payments.
6. Can I refinance my mortgage again in the future? Yes, refinancing is possible, but subsequent refinancing should be carefully considered against market conditions and personal financial goals.
7. Who can help me decide if this is the right move? Mortgage brokers, like those at Esteb and Co, are well-equipped to provide guidance tailored to your financial situation.