My sister wants to buy a car. Is she better off financing that through her mortgage than getting finance for the car separately?

Interesting question

If your sister’s home loan has enough funds in her redraw then using the mortgage to buy the car could be an option. It really depends on what the car is for – if it is for business then a hire purchase or leasing finance might be a better option as there are tax advantages in doing so.

If the car isn’t for business then it comes back to how much money is available in the redraw, what the interest rate is on the home loan and what interest rates are available for the car finance. She could apply for an increase on the home loan if there are no funds in the redraw but that may mean refinancing her loan which could take up to 3- 4week to gain access to the funds.

Car loan generally only takes a couple of days but it is important to check the interest rate on the car loan and weighing up what the best option is.

Hi Amy C,

That is a great question. If your sister is good at making her loan repayments then it would be best getting it through her mortgage, especially if she intends to keep the car for a while. Your sister would just need to make sure that she seeks a good mortgage broker that will ensure that the additional funds are set up as a separate split on her loan & the term matches how long she intends to keep the car for.

However if your sister intends to upgrade her car regularly, like a good friend of mine. Then it is better off to get a separate car loan.

I hope this helps.