Can you roll debt into your home loan?

If credit cards and personal loans are squeezing your monthly budget, debt consolidation is one option to compare. It can reduce the required repayments, but moving debts into your mortgage secures them against your home and can increase the total interest if you repay them over a longer term. Mortgage broker in Brisbane

Debt consolidation combines debts into a new loan. That could be a personal loan or, for an eligible homeowner, extra borrowing against the home. The right option depends on the rate, fees, repayment term and whether you can afford it. Using a mortgage is not automatically the best choice.

There are many reasons why you should consider consolidating your debts:

• you are finding it difficult to track what repayments are due and when. This usually happens if you have many debts from different providers.
• you are also struggling to keep your debts under control
• you are falling behind in payments

In the cases above, consolidating your debts into one can help you regain control of your finances by making it easier to control your spending and borrowing habits. 

Read more: How to pay off your home loan faster.

Debt consolidation can help you manage your spending.

When you decide to consolidate debt, you generally have two main options: taking out a new unsecured personal loan or accessing your home equity (refinancing).

An unsecured personal loan does not use your home as security. A home-equity loan may offer a lower interest rate, but it puts the home behind the debt. Compare the actual offers and total repayment cost rather than assuming the lowest rate is the best result.

The interest rate and repayment term both matter. A personal loan may require a higher monthly repayment because it is repaid sooner. Moving the same debt to a mortgage can lower the required payment by stretching it over more years. You can ask for a separate split with a shorter repayment term.

Here is an illustrative comparison for $30,000. These rates are assumptions, not current offers. Repayments include principal and interest, with a constant rate and no fees or offset balance.

In this example, the lower required repayment frees up about $522 a month. Much of that reduction comes from taking 30 years to repay the debt instead of 5 years.

At the assumed rates, the 30-year option costs about $36,000 in interest, compared with about $12,000 over 5 years for the personal loan. A lower required repayment is not the same as a lower total cost.

To get the best of both worlds, we recommend a disciplined approach:

1. Compare whether the secured loan is suitable after fees and risks, using the actual rate offered.
2. Set a repayment target for the consolidated amount. In this $30,000 example at 6.20%, about $583 a month would clear it in 5 years, or about $441 in 7 years, assuming a constant rate and no fees. Paying only slightly above the $184 minimum would not achieve that target.

Ask to compare the debt over the same repayment period first. A shorter split or planned extra repayments may help control the long-term cost, provided the lender allows them and they fit your budget.

You can consolidate the following debts into your home loan:

• Credit card loans
• Personal loans
• Car loans
• Tax debts
• AfterPay and similar buy now pay later services

High-interest unsecured debts may be worth comparing for consolidation. Check each creditor’s payout and closure requirements, early repayment costs and the proposed mortgage term before deciding.

Read more: Positive credit reporting.

The amount you can consolidate depends on the accepted property value, existing mortgage, income, other debts and the lender’s policy. Limits on the amount, number and type of debts vary. There is no single dollar limit that applies across lenders.

Non-bank lenders also assess affordability, equity, credit history and the purpose of the loan. Having equity does not give you unlimited consolidation borrowing.

A new LMI premium or higher pricing at a higher LVR can outweigh the benefit. Compare those costs before deciding whether to proceed. expert mortgage broker

How much debt you can consolidate into your home loan depends on the type of lender you are using and how much equity is available in your home

Valuations can differ between lenders. Your broker can check which valuation options are available and whether recent comparable sales support a review. A higher valuation is not guaranteed.

An agent’s appraisal and recent comparable sales can help explain your estimate, but the lender decides which valuation it accepts. A broker may be able to request another lender’s valuation or submit evidence supporting a review.

Lenders may use automated valuations, desktop assessments or inspections. A different method can produce a different result, but applying widely just to chase a higher number can add cost and enquiries.

We had a client who bought a house a couple of years ago for $700,000. We got one bank valuation at $800,000, the existing bank at $720,000, and another at $740,000 to that’s over 10% of the property’s value from what they originally bought between the banks. So, having different valuations can make all the difference if you’re consolidating your debt.

Some lenders require consolidated debts to be kept in a separate split or repaid over a shorter term. For example, a $400,000 mortgage and $50,000 of card debt might be structured as separate amounts, with the $50,000 repaid over 5 years. Check the actual lender requirements.

Eligibility varies by lender, property and credit history. A lender will assess the following factors; they are not a universal approval checklist:

• Whether the property is owner-occupied or an investment, and whether the selected product permits the proposed consolidation.
• Your recent mortgage repayment history and any arrears; the review period depends on the lender.
• You have not missed any repayments on your credit card and personal loans. 
• You are in a good financial position and can repay the loan.
• You have stable employment.
• You have a good credit score.

Some lenders might be lenient towards missed repayments if they were caused by something major like a divorce, bereavement or sickness. Your mortgage broker can explain this to the lenders. 

Non-bank lenders may consider consolidating your bank even if your credit history is not so good, but you may have to pay higher interest rates.

Read more: 27 ways to get unconditional approval.

Every situation is different, so talk to your mortgage broker to determine if you qualify for a debt consolidation home loan.

If you have been declined by a major bank because of a default, judgment, or mortgage arrears, do not panic.

A default or arrears can restrict the available options. Some specialist lenders assess applications that fall outside mainstream policies, but they still need to assess the credit history, explanation, equity and ability to repay. Approval and a lower overall cost are not guaranteed.

We often use a specific strategy for clients with bad credit:

1. Compare specialist lending with hardship arrangements and financial counselling first. A specialist loan may cost more; it needs to improve your position after fees and the risk to your home are considered.
2. An affordable repayment plan and consistent repayments can help rebuild your position over time.
3. Review whether mainstream refinancing becomes available later. Do not depend on being able to switch in 12 or 24 months; future approval and rates are uncertain.

• Paid or unpaid defaults: the amount, type, age and circumstances matter. Ask which debts must be paid before application or from settlement funds. Do not assume a small default is automatically acceptable.
• Mortgage arrears: tell the broker exactly what is overdue and whether the cause has been resolved. The lender will assess the repayment history and current affordability. Ask the existing lender about hardship assistance if repayments are already unmanageable.
• Part IX debt agreements: these have significant credit and legal consequences. Current or completed agreements need specific lender assessment. Obtain financial counselling or legal advice before treating refinancing as the solution.

The documents required for debt consolidation are similar to those required for a regular home loan application, with some extra documentation. The list includes, but is not limited to:

• Most recent bank statements. usually for the past 3 months
• Payslip
• Your identification documents
• Current assets and liabilities statement
• PAYG applicants also require:Recent group certificateRecent tax return
• If you are self-employed, an alt-doc loan may be one option, depending on the lender and available income evidence. self-employed, alt-doc loan.

These requirements are just a guideline. Each lender has different requirements, and your mortgage broker can help you gather and assess the needed documents.

Read more: Maximise your borrowing power.

The maximum LVR depends on the lender, insurer, debt purpose, property and credit history. Check the permitted amount against your actual valuation and loan balances.

A strong repayment history can help, but it does not guarantee a particular LVR. Previous missed payments may change the eligible lenders, maximum loan amount and price.

Some lenders consider more complex credit histories. Their limits and pricing need to be checked for the individual application.

Ask which LVR is available for your situation and whether a new LMI premium or other costs would make consolidation less worthwhile.

Read more: What is Loan to Value Ratio?

The rate offered depends on the lender, loan size, LVR and credit history. Standard home-loan pricing is not guaranteed. The example below compares monthly interest only, not the full required repayments, and uses assumed rates that are not current offers.

Illustrative reduction in monthly interest: $4,596 less $4,224 is about $372. This is not a repayment saving calculation. Required repayments also include principal where applicable and depend on each loan’s remaining term and fees.

Read more: Fixed vs Variable Interest rates

The fees and charges for debt consolidation can include:

• Government and discharge fees: use the current state or territory charges and the old lender’s written payout and discharge quote.
• Application and valuation fees: check the new lender’s current charges and whether any waiver applies to your loan.
• Establishment and service fees: include ongoing monthly or annual charges in the comparison.
• Early Repayment Fees: If you are on a fixed rate, you may have to pay “break costs.”

Some banks may waive fees and charges, so talk to your mortgage broker to see if you can get some of the fees and charges waived.

Consolidating your debts into your home loan has many advantages, including:

• You may simplify repayments and reduce the rate on some debts, depending on the new structure.
• You can save money on your monthly interest repayments (as we calculated above)
• Debt management becomes easier
• You can use the savings to pay off your mortgage faster 
• You only have to remember the repayment date for one loan
• A suitable, affordable arrangement may help manage debt; consolidation does not guarantee you will avoid insolvency.
• You will not have to keep track of different charges and fees for many loans
• Pricing depends on your loan and circumstances.
• Required monthly repayments may fall; compare the total repayment cost too.

Read more: Barefoot Investor Bank Accounts explained

As is the case with everything, debt consolidation has its disadvantages. You must decide whether the advantages outweigh the disadvantages. Here are the disadvantages:

• Home loans are paid over a longer period of time. usually 30 years. so you might end up paying more interest in the long term. You can mitigate this by making extra repayments whenever you can.
• Consolidating debts into your home loan will increase your home loan balance.
• Increasing the home loan balance may increase your LVR, which can ultimately affect your interest rates.
• If your LVR increases to above 80%, you may be required to pay Lenders Mortgage insurance, which can be thousands of dollars. 
• Consolidating your debts may reduce any equity you may have gained from paying off your mortgage.
• You may have to pay set-up fees for the new loan.

If you are thinking of consolidating your debts into your home loan, talk to your mortgage broker to find the best way to do it!

What is good debt, and what is bad debt? The simple way of looking at it is that bad debt will cost you money, whereas good debt will potentially make you money.

• Student loans or HELPS or HECS debt.  This is an investment in the future which will help you earn more income in the future.
• Investment or business borrowing can fund an asset or activity intended to earn income. Returns are uncertain and losses can leave the debt outstanding.
• Home Loan (Mortgage). This is more of a neutral debt because you are not necessarily going to make money from it, but it is going to stop you from paying rent and potentially build some equity.

• Car loan. Interest rates are very high, and in about 5 years, the value of the car may be less than half what you bought it for because cars are depreciating assets.
• A personal loan used for a holiday or other consumption leaves repayments after the purchase is over. Compare the actual rate, fees and repayment term before borrowing.
• Credit card debt can become expensive when balances carry over. Compare the interest, fees and a realistic repayment plan.

Debt consolidation is not a magic potion that can reduce your level of debt. All it does is allow you to manage your repayments easily. Debt consolidation should be done together with a plan to manage your finances. 

Debt consolidation should be done together with a plan to manage your finances.

Here are some tips for managing your debts:

• Change your spending patterns. It’s as simple as not buying what you cannot afford. Distinguishing between wants and needs will help you change your spending patterns.
• Use a budgeting tool. There are plenty of apps that you can use to keep track of your expenses. If not, a regular spreadsheet can do the job just fine.
• Make as many extra repayments as possible to reduce your loan balance.
• Confirm the required closure or limit reduction for each paid-out account before settlement. Follow the lender and insurer conditions and avoid building up the repaid balances again. Check any continuing fees on accounts you retain.
• Speak to a professional. If you are still struggling to manage your debt, you may need to speak to a debt counsellor or financial advisor to help you manage your spending habits.

Georgia had just returned to work after maternity leave, and she and Luke had recently had their second child. Even with 2 incomes coming in again, the mortgage, car loan, personal loan and 2 credit cards took such a large bite from each pay that it never felt like they were getting ahead.

They had a $480k mortgage and $70k across the other debts. Their existing lender still declined the top up because it assessed the current repayments and the full $25k in card limits before those debts were paid out.

I was able to get the new $550k loan approved. We found a lender that let us pay out the credit cards, car loan and personal loan at settlement, and both cards were closed. But the lower minimum was not the whole solution. Georgia and Luke kept putting another $500 a month into the offset so those short debts did not quietly become a 30 year problem.

If you are already missing repayments, contact your creditors' hardship teams early. You can also speak to a free financial counsellor through the National Debt Helpline on 1800 007 007. Moneysmart's debt consolidation guide explains the costs and risks to compare. A refinance review can happen beside that support. It should not delay it.

Related lender guides: Macquarie · Commonwealth Bank · Pepper Money · Resimac

Lender rules checked 17 September 2026. This is a starting point, not a ranking, recommendation or credit advice. Lending policy can change without notice, and each lender assesses your full application.

I would not choose a lender from this table. I check the equity, identify each debt and review recent repayments before comparing lenders that can assess the full application.

Reduced buffer refinance pathways are narrow. They are generally designed for a close replacement of an existing home loan, with tight limits on extra borrowing and purpose.

This is why a borrower may pass an eligible mortgage only refinance path but fail when cards and personal loans are added. Use the refinance home loan guide to compare the wider application, costs and remaining term.

The first safeguard I set is the target term for the consolidated amount. It tells us the repayment before the lower home loan minimum becomes the household's new default.

A target that leaves no room for a car repair, school cost or rate change is unlikely to last. I will show you the monthly repayment and the longer term cost before the application goes in, so the decision is deliberate rather than a default.

Already have a proposed refinance? Send the current balances, payouts, proposed rate, term and costs. I can put the 4 repayment options beside each other before the application is lodged.

The step-by-step refinancing process explains the application, discharge and settlement stages.

The next useful step may be smaller than a refinance. It could be getting a payout figure, closing an unused card, asking for hardship support, testing the valuation or setting a repayment that clears one debt without moving it.

If you’re ready to consolidate your debts, we are here to help you. Our team at Hunter Galloway is here to help you buy a home in Australia.

Unlike other mortgage brokers who are just one-person operations, we have an entire team of experts dedicated to helping make your home loan journey as simple as possible.

If you want to get started, please give us a call on 1300 088 065 or book a free assessment online to see how we can help.

Our team of home loan experts is here to help you consolidate your debts

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