Mortgage refinancing is becoming more and more common among Australian homeowners. Indeed, according to the Australian Bureau of Statistics (ABS), the June Quarter of 2025 saw 155,217 home loan refinances. That’s the highest of any quarter since the ABS started collecting data in the September Quarter of 2019. On top of that, survey data from Finder revealed that almost one in five mortgage holders planned to refinance in the next six months.
One common reason for refinancing your mortgage is to top up the loan with extra funds. You might look to do this if you’re making a big purchase, such as a new car, and don’t want it to impact your monthly budget too much. Before you do that, though, it’s essential to understand what that decision will cost you.
The cost of adding a car to your home loan
Let’s say you have a $600,000 mortgage with a 5.34% and 25 years left to run. Running the calculations shows your monthly repayments will be $3,627 and the total interest you’ll have to pay is $488,225.
At the same time, you’re also in the market for a new car. You find the model you like for $50,000, so you decide to buy it and bundle it into your home loan by refinancing to a cheaper rate of 5.24% p.a. This means your loan is now worth $650,000, with repayments of $3,891 per month and $517,383 in overall interest.
While that would put you behind the wheel of a brand new car, you’d be paying a premium to do so. As the mortgage runs over 25 years, you’re paying your car off for far longer than you’d ever be able to drive it for.
Contrast that with taking out a separate five-year, 5.85% p.a. car loan to purchase your new vehicle. This one would come with monthly payments of $963, but would ultimately cost just $7,789 in interest. You can see how these costs shake out in the table below:
| Loan package | Total loan amount | Monthly repayment | Total interest paid |
|---|---|---|---|
| Home loan without car | $600,000 | $3,627 | $488,225 |
| Refinance with car | $650,000 | $3,891 | $517,383 |
| Home loan and car loan | $650,000 | $4,590 | $496,014 |
As you can see, while taking out a home loan and car loan separately would cost you $699 more per month compared to adding it to your car loan, you’d ultimately save a touch over $21,000 in interest. To put that in perspective, $21,000 is over 40% of what you’d pay for your next $50,000 car, or enough money for a holiday or funding some renovations around your home.
Another way of looking at it is that adding the car to your home loan means you’re paying just under $30,000 in interest on a $50,000 vehicle. When you put that up against the $7,789 on your five-year car loan, it’s plain to see why this can be a major money pit for Aussie homeowners.
“If you’re on the hunt for your next car while paying off your home loan, a good mortgage broker will be able to put you in touch with an asset finance broker to help you buy your vehicle”, Savvy Managing Director Bill Tsouvalas said.
“Be wary of mortgage brokers who encourage or allow you to take out equity for purchases like new cars on a 20 to 30-year home loan. If it’s a must for you to upgrade a vehicle due to a growing family or needing an upgrade to something more reliable, that’s a different story.
“Even then, though, it would still likely be financially beneficial to only access some equity to go towards the vehicle and finance a smaller percentage of it with a car loan.”