Will a Car Loan Affect My Mortgage?
Plenty of people have a car loan and a mortgage. This page covers how lenders look at one when you apply for the other, how to time them well, and where to compare a car or personal loan when you need one.
Will a Car Loan Stop You Getting a Mortgage?
No. People get mortgages with car loans all the time. What a car loan does is change the number, because the lender counts the repayment when it works out what you can borrow. Knowing how that works before you apply puts you in a much better spot. Here's how a lender gets to your limit.
Can you afford the repayments?
The lender adds up your income, takes off your living costs and your existing commitments, and checks that what's left covers the new mortgage repayment. They test it at a higher rate than you'd actually pay, so you'd still be fine if rates moved. A car loan goes in as its monthly repayment, which is why the repayment size matters far more than what you owe.
How much debt would you be carrying overall?
Since mid 2024, banks have had a Reserve Bank limit on how much total borrowing they can lend against a household's income. A car or personal loan counts toward that total alongside the mortgage. For most people this test isn't the one that bites, but it's part of the picture.
How much deposit do you have?
The bank lends a share of the property's value and your deposit covers the rest. The car loan only comes into this one if you're thinking about paying it off with your savings, because money spent clearing the loan is money that's no longer deposit. Sometimes that trade is worth it, sometimes it isn't. More on that further down.
Your real limit is the lowest of the three
Each test gives a maximum, and the smallest one is what you can actually borrow. Which test is the tight one depends on you, your income, your deposit and your timing, which is why the same car loan barely matters for one buyer and matters a lot for another. Working out where you land is the bit we do.
General information about how home lending works in New Zealand. Every lender runs its own version of these tests, which is why two banks can hand the same person two different numbers.
What a Car Loan Does to What You Can Borrow
Here's an illustrated example of how a car loan can affect borrowing capacity. One couple, one car loan, and the difference it made to what a lender would let them borrow, using lenders' own servicing calculators.
A couple buying their first home, with a $400 a month car loan.
Roughly three times the size of the car loan itself.
An illustration, not a quote. Figures come from lenders' own servicing calculators, run on the example household above, in August 2026. Your own income, expenses, deposit and credit history all move the number, and lenders have separate limits that can cap you sooner. General information only, not financial advice.
The Car, the House, and Which Comes First
Having a car loan isn't the issue. Timing is. Here's how it plays out before, during and after a home loan, and whether the car belongs on the mortgage at all.
Does a Personal Loan Affect a Mortgage?
Same answer as the car loan. It doesn't stop you, and it does count. To a lender, a personal loan is a monthly repayment, whatever it was for. Here's how it plays out, and where it can help.
Treated the same as a car loan
The repayment goes into the servicing test in full, and what the loan was for doesn't much matter. Same timing as above: fine to have one, best not to take a new one out mid-application.
Using a personal loan as your deposit
Lenders want a deposit you've saved, been gifted or taken from KiwiSaver, not one you've borrowed. A loan taken out to top up a deposit generally won't count as deposit, and its repayment counts against you on top. If you're short, talk to us first. There are better routes.
Consolidating a few debts into one
Rolling a card, an overdraft and a couple of instalment plans into one loan can lower your total monthly repayment, which helps the servicing test. Closing the cards helps too, since lenders count the limit, not the balance. Tell us before you do it, because how it's structured changes the numbers.
Simplify covers personal loans and debt consolidation too, through the same link. Compare below
Compare Car and Personal Loans Through Simplify
When you need a car, boat, business or personal loan, Simplify is where we send people. You complete one application and they compare options across a panel of lenders, rather than you approaching a single bank. The comparison is quick to complete, and Simplify confirms it has no impact on your credit score.
Need a car, boat, bike, caravan, business or personal loan? Simplify checks the market for you. You can start with them using my link below.
Using this link tells Simplify you came from us. If you take a loan through them, they pay us a referral fee, set out on our disclosure page. Simplify is a separate company with its own fees and charges.
Car and Personal Loan FAQs
Straight answers to the questions people actually ask.
No. Plenty of people hold both. What it does is lower what you can borrow, because lenders count the repayment when they test what you can afford. The size of the repayment matters more than the balance. The section above walks through the three tests a lender runs.
Sometimes. Clearing it frees up the repayment, which goes straight back into your borrowing power. But if it empties your savings, you've traded deposit for servicing, and the deposit can be the tighter limit. We run the application both ways and go with the stronger one. Book a chat and bring the loan statement.
Best to wait if you can. Your approval is based on the financial position you showed the bank, and a new loan changes it. Lenders can check again before the money goes out, and the amount they'll lend can drop after you've already committed to the house. If the car genuinely can't wait, tell us before you sign anything.
Yes, and early. There's no judgment in it, and it shows on your bank statements anyway. Knowing about it up front means we structure the application around it, instead of explaining it to a lender after they've spotted it themselves.
No. We advise on home loans, plus personal cover like life, health, trauma and mortgage protection. For car, boat, business and personal lending we point you to Simplify, a separate company with its own advisers, and their team takes it from there.
They can. Simplify charges a service fee that ranges from nothing up to $2,500 depending on the loan. It only applies if you enter a credit contract, and it's built into your repayments. Their fees and charges page sets it out. Our side, the mortgage advice, costs you nothing. We're paid by the lender when your home loan settles.
Email us and we'll put you on to the right person at Simplify. The loan itself, the rate and the paperwork are theirs to answer. Anything about how it sits next to your mortgage is ours.
No. Simplify is the comparison service we hold a link with, that's the whole reason they're on this page. Borrow wherever you like, and it makes no difference to the mortgage side of what we do for you.
Sorting a Car Loan and a Home Loan?
Before you commit to either, talk it through with us. In one quick call we'll help you work out:
- Whether clearing the car loan helps or hurts your application
- What your repayments actually do to your borrowing power
- The right order: car first, house first, or both together
- Which of our 25+ lenders would look at your situation most kindly
