Bank Mortgage vs Car Finance
Thinking about topping up your mortgage instead of taking car finance? Here's what actually costs more over time.
Why a Lower Rate Doesn't Always Mean a Lower Cost
A mortgage top-up usually comes with a lower interest rate than a car loan, but the real cost comes from how long you're paying it off. Car finance is typically repaid over 3 to 5 years, while a mortgage runs over 20 to 30. Stretching the cost of a car out over a mortgage term can mean paying interest on it for years after the car itself is gone, even at that lower rate.
Use our finance calculator to see what your repayments and total interest would look like on a car loan over a realistic term, then compare that against what your bank quotes for extending your mortgage by the same amount.
Mortgage Top-Up vs Car Finance
Mortgage Top-Up
Usually a lower interest rate, but repaid over 20 to 30 years. That longer term can mean more total interest over the life of the loan, and it reduces the equity in your home for a purchase that won't last anywhere near that long.
Car Finance
The interest rate is usually higher than a mortgage, but it's repaid over a much shorter term, typically 3 to 5 years. It's kept separate from your home loan, doesn't touch your home equity, and is easy to track as its own cost.
Mortgage vs Car Finance FAQs
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The interest rate is usually lower, but the total cost often isn't. Because a mortgage is repaid over a much longer term, you can end up paying more interest overall than you would on a car loan with a shorter term, even at a higher rate.
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You're paying it off over 20 to 30 years instead of a few, which usually means more total interest, and it reduces the equity in your home for a purchase that won't last anywhere near that long.
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It's repaid on a fixed, shorter term, doesn't affect your home equity, and is easy to track as its own cost rather than getting absorbed into decades of mortgage repayments.
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Yes, most car loans through our lending partners allow early repayment. Ask our team or check with the lender directly for the specific terms on your contract.
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Use our finance calculator to estimate your repayments and total interest on a car loan, then compare that against what your bank quotes for a mortgage top-up of the same amount.
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UDC Finance, Finance Now, Marac Car Loans, and MTF, the same lending partners we use across our range.
Try our Car Finance Calculator, or see our Car Finance Questions Answered page for general application details.