Car Loan in Mortgage? Control Your Payments (2026)

Many Australians find themselves juggling multiple debts, and the idea of consolidating a car loan into a mortgage can seem like an attractive solution. If you're looking to streamline your finances, reduce monthly payments, or secure a lower interest rate, this strategy might have crossed your mind. But is it the right move for you?

Understanding Car Loan Consolidation into a Mortgage

The concept of rolling a car loan into a mortgage involves refinancing your current home loan to include the balance of your car loan. This can potentially lower the interest rate on your car loan and reduce your monthly obligations by extending the repayment period. However, it's crucial to understand both the advantages and potential drawbacks before proceeding.

Current Market Rates and Requirements

As of 2026, Australia's home loan interest rates typically range from 4.5% to 7.5%, depending on the lender and your credit profile. Car loans, on the other hand, can have interest rates ranging from 6.49% to 12%. Refinancing your mortgage to include your car loan might lower the interest rate on your car debt, but it will also convert it into long-term debt.

To qualify for refinancing a car loan into your mortgage, lenders typically require:

• A good credit score (usually above 650)
• Sufficient equity in your home
• Stable income and employment
• Overall strong financial health

Steps to Consolidate Your Car Loan into a Mortgage

Here is a step-by-step guide to help you navigate the process:

1. Evaluate Your Financial Situation: Assess your current debts, interest rates, and monthly payments. Determine if consolidating makes financial sense.
2. Check Your Home Equity: Ensure you have enough equity in your home to cover the additional amount of your car loan.
3. Contact Esteb and Co: With access to 83+ lenders, Esteb and Co can help you find the best refinancing deal tailored to your needs.
4. Gather Documentation: Prepare necessary documents like proof of income, credit report, and details of your current loans.
5. Apply for Refinancing: Submit your application through your chosen lender, ensuring all information is accurate and complete.
6. Finalise the Loan: Once approved, review the terms carefully before signing. The car loan amount will be added to your mortgage balance.

Expert Tips and Considerations

Here are some key considerations to keep in mind when deciding whether to consolidate your car loan into your mortgage:

• Long-term Costs: While your monthly payments may decrease, extending your car loan over the term of your mortgage can increase the total interest paid.
• Loan Terms: Ensure the new loan terms align with your financial goals. Longer terms with lower rates might not always be the best choice.
• Financial Discipline: This strategy requires discipline to avoid accumulating new car debt, which would negate the benefits of consolidation.
• Professional Advice: Consulting with financial advisors or mortgage brokers like those at Esteb and Co can help clarify if this option suits your financial situation.

Frequently Asked Questions

• Can I refinance my mortgage to include my car loan? Yes, you can, provided you meet the lender's requirements for refinancing and have sufficient equity in your home.
• Will consolidating my car loan into my mortgage save me money? It depends on the interest rate difference and the term of the loan. Lower rates can save money, but longer terms might increase total interest paid.
• Are there any risks involved with this consolidation? The main risk is extending the debt repayment period, potentially increasing the total interest paid over time.
• How can Esteb and Co assist in this process? With a panel of over 83 lenders, Esteb and Co can offer a variety of refinancing options and expert advice tailored to your needs.
• What happens if I fail to meet the new mortgage payments? Failure to meet mortgage payments can lead to foreclosure, so it's crucial to ensure the new terms are manageable.
• Is it better to pay off the car loan separately? This depends on your financial situation. Paying it off separately might be beneficial if you can manage the payments and interest is minimal.
• Can I include other debts in the refinancing? Yes, other debts like credit cards or personal loans can also be consolidated into your mortgage, subject to lender approval and equity availability.