Can You Get a Home Loan with a Personal Loan?

Getting a Home Loan with a Personal Loan

Yes, you may be able to get a home loan if you already have a personal loan.

A personal loan does not automatically stop you from getting a mortgage, but it can reduce your borrowing power because lenders include the repayment as an ongoing commitment. The same applies to car loans, unsecured loans, consumer loans, hire purchase agreements and other fixed-repayment debts.

Some borrowers can still get approved with a personal loan in place. Others may need to pay it out, reduce other debts, lower their credit card limits, borrow less, increase their deposit or choose a lender that assesses their situation more favourably.

This guide explains how Australian lenders may assess personal loans, car loans, fixed repayment debts, debt consolidation, loan statements, repayment history and payout requirements, based on current policy research.

Can you get a home loan with a personal loan?

Yes, you can apply for a home loan while you have a personal loan.

A lender may still approve the mortgage if:

• your income is stable
• the personal loan repayment is affordable
• the loan is disclosed
• repayments are up to date
• your credit history is acceptable
• your living expenses are realistic
• your deposit is sufficient
• the property is acceptable security
• the proposed home loan still services
• the lender’s policy can accept the overall risk

The main issue is borrowing power.

If the personal loan repayment is large, it can reduce the amount you can borrow for a home loan.

How does a personal loan affect borrowing power?

A personal loan affects borrowing power because the lender includes the repayment in your serviceability assessment.

The lender may assess:

• the current monthly repayment
• the remaining balance
• the remaining loan term
• repayment history
• interest rate
• whether the loan is secured or unsecured
• whether the loan will continue after settlement
• whether it will be paid out before or at settlement
• whether the loan is personal or business-related
• whether repayments are shown on bank statements or credit reporting

The higher the repayment, the more it can reduce borrowing capacity.

Related research: Do Credit Card Limits Affect Your Home Loan Borrowing Power?

Why personal loans can reduce your mortgage amount

A home loan lender needs to make sure you can afford both your existing debts and the proposed mortgage.

For example, if you pay $650 per month on a personal loan, that $650 is money that cannot be used for home loan repayments.

The lender’s calculator may include:

• proposed mortgage repayment
• existing personal loan repayment
• credit card commitments
• car loan repayments
• HECS/HELP, if applicable
• buy now pay later commitments
• living expenses
• dependants
• other ongoing debts

Even one personal loan can make a noticeable difference if borrowing power is tight.

Is the balance or repayment more important?

Both can matter, but the repayment often has the biggest serviceability impact.

A personal loan with a $10,000 balance and a high monthly repayment over a short remaining term may hurt borrowing power more than a larger loan with a lower repayment.

The lender may look at:

• balance owing
• monthly repayment
• remaining term
• whether the loan is nearly finished
• whether the repayment is fixed
• whether the loan is being refinanced or retained

The loan balance also matters for debt-to-income ratio and overall risk.

Does the personal loan need to be declared?

Yes.

You should disclose all personal loans and car loans in your home loan application.

Lenders may identify them through:

• credit report
• bank statements
• repayment history information
• loan statements
• account conduct
• payslip deductions, if relevant
• debt consolidation documents
• responsible lending questions

If a personal loan is not declared and the lender finds it later, the application may be delayed, reassessed or declined.

What types of loans are assessed?

A lender may assess a range of fixed-repayment liabilities, including:

• personal loans
• car loans
• motor vehicle finance
• hire purchase
• unsecured loans
• secured personal loans
• debt consolidation loans
• consumer loans
• retail finance loans
• interest-free loans with repayments
• equipment loans in personal name
• personal loans used for business purposes
• loans from another bank
• loans with the same lender

The lender generally needs to include any ongoing repayment commitment.

Are car loans treated like personal loans?

Often, yes.

A car loan is usually treated as a fixed repayment commitment.

The lender may assess:

• monthly repayment
• balance
• remaining term
• repayment history
• balloon payment, if any
• whether the vehicle finance is secured
• whether the car loan will be retained
• whether it will be paid out

A car loan can reduce borrowing power in the same way as a personal loan.

What if the car loan has a balloon payment?

A balloon payment can matter.

A balloon is a lump sum due at the end of the loan term.

The lender may ask:

• what is the balloon amount?
• when is it due?
• will it be paid from savings?
• will it be refinanced?
• will the car be sold?
• is the borrower likely to take a new car loan?
• is the current monthly repayment artificially low because of the balloon?

A low repayment with a large balloon may still create future affordability risk.

What if the personal loan is almost paid off?

A personal loan that is almost paid off may still be included unless the lender can exclude it under policy.

The lender may ask:

• how many repayments remain?
• what is the payout figure?
• will it be cleared before settlement?
• will it be cleared at settlement?
• is there evidence of available funds?
• has the loan account been closed?

Some lenders may ignore a loan with only a short time remaining if evidence is strong, but this is not automatic.

Can a personal loan be excluded if it ends soon?

Possibly.

Some lenders may exclude a personal loan if it will be repaid before settlement or has a very small number of repayments left.

They may require:

• recent loan statement
• payout figure
• evidence of remaining term
• repayment schedule
• confirmation no redraw is available
• evidence it will be closed
• bank statement showing final payment

If the loan continues after settlement, it will usually be included.

What if you pay out the personal loan before applying?

Paying out the personal loan may improve borrowing power.

The lender may ask for:

• payout confirmation
• closure letter
• loan statement showing zero balance
• bank statement showing payout
• updated credit report, if available
• confirmation the facility is closed

Paying the balance down but leaving a redraw or credit facility available may not be enough if the lender treats it as ongoing debt.

Should you pay off a personal loan before applying?

It depends.

Paying off the personal loan may help if servicing is tight.

However, it may hurt if it uses cash needed for:

• deposit
• stamp duty
• legal costs
• settlement adjustments
• genuine savings
• cash buffer
• moving costs
• emergency savings

The best option depends on whether the bigger issue is borrowing power or funds to complete.

A broker can compare both scenarios before you use savings to clear debt.

What if paying off the loan reduces your deposit?

This is common.

For example, paying off a $15,000 personal loan may improve borrowing power, but it may also reduce your deposit by $15,000.

That can affect:

• LVR
• lenders mortgage insurance
• funds to complete
• genuine savings
• eligibility for some first-home buyer pathways
• cash buffer after settlement

Sometimes keeping the loan and preserving deposit is better. Sometimes paying it out is better.

The numbers need to be modelled.

Can you pay out the personal loan at settlement?

Yes, this may be possible.

A lender may allow the personal loan to be paid out at settlement using:

• your own funds
• home loan refinance funds
• surplus sale proceeds
• debt consolidation funds
• equity release funds, where policy allows

The lender may require:

• payout statement
• current balance
• account details
• settlement direction
• confirmation the loan will be closed
• evidence the loan will not remain available

If the loan is being cleared at settlement, the lender may exclude the ongoing repayment from post-settlement servicing.

Can you consolidate a personal loan into your mortgage?

Possibly.

Debt consolidation may be available if you are refinancing or borrowing against existing equity.

A lender may consider consolidating:

• personal loans
• car loans
• credit cards
• store cards
• overdrafts
• other consumer debts

However, the lender will assess whether the consolidation is responsible, affordable and within policy.

Debt consolidation can lower monthly repayments but may increase total interest if short-term debt is spread over a long mortgage term.

Is debt consolidation always a good idea?

No.

Debt consolidation can help cash flow, but it is not always the best financial outcome.

Benefits may include:

• lower monthly repayments
• simpler debt management
• improved borrowing capacity
• fewer accounts
• lower interest rate than unsecured debt

Risks may include:

• paying interest over a much longer term
• turning short-term debt into long-term mortgage debt
• increasing total interest cost
• rebuilding the personal loan or card debt later
• using home equity to pay unsecured debt

Debt consolidation should be part of a clear plan, not a way to keep spending.

What if you consolidate but keep taking new debts?

Lenders may be cautious if you repeatedly consolidate personal debts.

They may view repeated consolidation as a sign of:

• reliance on credit
• cash-flow pressure
• poor budgeting
• increasing unsecured debt
• weak savings habits
• financial stress

A lender may ask why the debt arose and whether the behaviour has changed.

Repeated personal loan and credit card consolidation can reduce lender confidence.

What if the personal loan was used for a house deposit?

This can be a problem.

Borrowed deposit funds are treated carefully.

A lender may ask:

• was the deposit borrowed?
• is the personal loan still outstanding?
• is the repayment included?
• does the borrower have genuine savings?
• is the deposit from acceptable funds?
• was the loan recently taken out?
• does the application still fit LVR and LMI rules?

Some lenders and mortgage insurers may not accept a personal loan as a substitute for genuine savings.

Related research: Can You Use a Personal Loan as a Home Deposit in Australia?

Can you use a personal loan as your deposit?

Usually, this is difficult.

A personal loan deposit may create two issues:

• the lender must include the personal loan repayment
• the deposit may not count as genuine savings

Borrowed deposit funds can also signal that the borrower has not saved the required contribution.

There may be limited situations where borrowed funds are considered, but this is lender-specific and usually needs strong servicing.

What if the personal loan was for furniture?

A personal loan for furniture can still affect borrowing power.

The purpose may be understandable, but the repayment still counts.

A lender may review:

• balance
• repayment
• remaining term
• repayment history
• whether it is being retained
• whether it was recent
• whether new household expenses are realistic

If the loan was taken just before applying, the lender may ask why.

What if the personal loan was for a wedding?

A wedding loan is still a personal debt.

The lender may assess it like any other personal loan.

They may also review whether recent spending has affected:

• savings
• deposit
• cash buffer
• repayment history
• account conduct

The reason for the loan is less important than affordability and conduct.

What if the personal loan was for a car?

A car loan is common and often acceptable.

The lender will usually include the monthly repayment.

They may also consider:

• whether the car is needed for work
• whether there is a balloon payment
• whether the loan is secured
• whether the car loan will be paid out
• whether a car allowance is received
• whether the borrower has other vehicle finance

A car loan may be manageable if income and deposit are strong.

What if the personal loan was for business purposes?

A personal loan used for business purposes can be more complex.

The lender may ask:

• why was the loan taken in personal name?
• is the business making repayments?
• is the borrower personally liable?
• is the loan shown in business financials?
• is the business profitable?
• is the debt being refinanced?
• does the borrower rely on the business income?

If the borrower is personally liable, the lender may include the repayment unless policy allows otherwise.

What if your employer reimburses the personal loan?

This is uncommon, but if an employer reimburses a loan or expense, the lender may still need evidence.

They may ask for:

• employment contract
• reimbursement agreement
• payslips
• bank credits
• loan statements
• employer confirmation
• whether reimbursement is ongoing
• whether it is taxable

The personal liability may still remain even if reimbursements help cash flow.

What if a personal loan is paid by your business?

If a business pays the loan, the lender may still include it unless the business position is clear.

They may ask:

• is the loan in your personal name?
• does the business pay it regularly?
• is the payment reflected in financials?
• is it a director loan?
• is it an add-back issue?
• can the business afford it?
• are you personally liable?

If the business is weak or documentation is unclear, the lender may include the repayment personally.

What if the personal loan is in joint names?

A joint personal loan can be assessed against both borrowers.

If you and your partner are both applying for the home loan, the lender will usually include the repayment.

If only one borrower is applying, the lender may still include some or all of the commitment depending on legal liability and policy.

They may ask:

• who is legally liable?
• who pays the loan?
• is the other borrower servicing it?
• is there evidence of apportionment?
• is the loan being retained?
• will it be paid out?

Legal liability matters.

What if you are a joint borrower but do not pay the loan?

You may still be assessed if you are legally liable.

For example, if you are listed on a personal loan with a family member or ex-partner, the lender may include the repayment even if someone else pays it.

A lender may ask for:

• loan statement
• repayment evidence
• account ownership
• separation agreement, if relevant
• evidence another party has been paying consistently
• confirmation whether your name will be removed

Some lenders may still include the full repayment.

What if your ex-partner has the personal loan?

If you are still legally liable, it can affect your home loan.

This can occur after separation or divorce.

The lender may ask:

• whose name is on the loan?
• who is paying it?
• is it part of a property settlement?
• will it be refinanced or paid out?
• are repayments up to date?
• does it appear on your credit report?

If you remain liable, the lender may include it even if your ex-partner uses the asset.

What if a family member pays the loan?

A family member paying the loan does not automatically remove the liability.

The lender may still assess your legal obligation.

They may ask:

• why is the family member paying?
• how long have they paid?
• is there a formal agreement?
• are you still liable?
• could you be required to pay if they stop?
• will the loan be refinanced out of your name?

If the debt is yours, many lenders will include it.

What if the personal loan is guaranteed by you?

A guarantee can also matter.

If you guarantee someone else’s personal loan, the lender may assess the risk that you could become responsible.

They may ask:

• what is the guaranteed amount?
• who is the borrower?
• is the loan up to date?
• is the guarantee limited or unlimited?
• can the primary borrower service it?
• does the guarantee appear on your credit report?
• is the guarantee being released?

Guarantees can reduce borrowing capacity, even if you are not making repayments now.

What if the personal loan is not on your credit report?

It still needs to be disclosed.

Some liabilities may not appear clearly on credit reporting.

The lender may identify them through:

• bank statements
• direct debits
• payslip deductions
• loan statements
• application disclosures
• internal account data

If you are liable for a loan, disclose it even if it is not on the credit report.

What if the credit report shows a personal loan you forgot?

The lender may ask for details.

You may need to provide:

• current statement
• balance
• repayment amount
• account status
• payout figure
• closure evidence, if paid
• explanation if the account is old or incorrect

Undisclosed credit report liabilities can delay approval.

What if the credit report limit or balance is wrong?

This should be clarified.

A lender may use credit report information to verify liabilities.

If the information is outdated or incorrect, you may need:

• current loan statement
• payout letter
• closure letter
• bank confirmation
• updated repayment schedule
• evidence of dispute or correction

Do not leave mismatches unexplained.

Do lenders need personal loan statements?

Sometimes.

A lender may request personal loan statements to verify:

• balance
• repayment
• account conduct
• arrears
• payout amount
• repayment history
• whether the loan is being refinanced
• whether the loan is less than a few months old

Based on current policy research, some lenders may not require statements where reliable credit reporting data is available. Others may require statements, especially when debts are being refinanced or conduct needs review.

What if the loan is with another lender?

That is common.

The home loan lender may verify the debt through:

• credit report
• personal loan statement
• bank statement repayments
• payout letter
• loan contract
• repayment schedule
• online account screenshot

If credit reporting is sufficient, fewer documents may be needed. If not, statements may be required.

What if the personal loan is less than three months old?

A recently opened loan can require closer review.

The lender may ask for:

• letter of offer
• transaction history
• repayment schedule
• evidence of at least one repayment
• current balance
• purpose of the loan
• credit report details

A recent personal loan can also affect borrowing power because there may be limited repayment history.

What if the personal loan was opened after pre-approval?

This can create problems.

A new personal loan after pre-approval may require reassessment.

It can affect:

• borrowing power
• debt-to-income ratio
• LMI approval
• credit conduct
• final approval
• settlement conditions

A pre-approval is not a guarantee if your financial position changes before settlement.

What if you take a car loan before settlement?

Be careful.

A new car loan before settlement can cause the home loan to fail servicing.

A lender may request updated credit reports or updated liabilities before settlement.

If the new car loan reduces borrowing power too much, the lender may reduce the loan amount or decline.

Avoid taking new debt before settlement unless your broker confirms it is safe.

What if the personal loan is paid on time?

Good conduct helps.

A lender may view the application more favourably if:

• repayments are on time
• there are no arrears
• no missed payments
• no dishonours
• no hardship arrangements
• no defaults
• balances are reducing
• bank account conduct is clean

However, good conduct does not remove the repayment from servicing if the loan is continuing.

What if there are late repayments on the personal loan?

Late repayments can reduce lender options.

The lender may review:

• when the late payment occurred
• how late it was
• whether it happened once or repeatedly
• whether the account is now up to date
• whether late fees were charged
• whether repayment history information shows arrears
• whether there was financial hardship
• whether there are other credit issues

Recent late repayments are more serious than older isolated issues.

Related research: Can You Get a Home Loan with Late Repayments but No Default?

What if you missed one personal loan repayment?

One missed repayment may be explainable, but it depends on timing and lender policy.

A lender may ask:

• why was it missed?
• was it a bank error?
• was it corrected quickly?
• has it happened before?
• are other debts up to date?
• is there evidence of hardship?
• does the credit report show a missed payment?

If the rest of the file is strong, some lenders may still consider it.

What if you have repeated missed repayments?

Repeated missed repayments are more serious.

They can suggest:

• affordability pressure
• poor account management
• reliance on credit
• financial stress
• risk of future arrears

A lender may decline or require the issue to be resolved for a period before applying.

Specialist lenders may have options depending on the severity, LVR and explanation.

What if the loan is in arrears?

If the personal loan is currently in arrears, approval is harder.

A lender may ask:

• how much is overdue?
• how long has it been overdue?
• has the arrears been cleared?
• is there a payment arrangement?
• is hardship involved?
• are other debts affected?
• why did arrears occur?

Mainstream lenders usually want debts to be up to date before approval.

What if there is a hardship arrangement?

A personal loan hardship arrangement can affect home loan approval.

The lender may review:

• when hardship started
• when it ended
• whether the loan is now up to date
• whether hardship appears on credit reporting
• whether repayments have returned to normal
• whether the cause has been resolved
• whether the borrower can afford a new mortgage

Recent hardship can reduce mainstream lender options.

Related research: Can You Get a Home Loan After a Financial Hardship Arrangement?

What if the personal loan has a default?

A default can affect your application.

The lender may review:

• default amount
• date listed
• whether it is paid
• whether it is unpaid
• reason for default
• credit conduct since then
• other credit history
• LVR
• deposit strength
• whether specialist lending is needed

A paid default may be easier than an unpaid default, but lender treatment varies.

What if the personal loan was settled through a debt agreement?

This is more serious.

A debt agreement can limit lender options for a period of time.

The lender may assess:

• when the agreement started
• when it was completed
• whether all debts were paid
• current credit conduct
• savings history
• deposit size
• employment stability
• LVR
• whether specialist lending is required

A current or recent debt agreement is usually more difficult than a normal personal loan.

Related research: Can You Get a Home Loan After a Debt Agreement?

What if the loan was refinanced recently?

A recently refinanced personal loan may require explanation.

The lender may ask:

• why was it refinanced?
• was it for lower repayments?
• was it part of debt consolidation?
• did the balance increase?
• were arrears capitalised?
• has conduct improved?
• is the new repayment sustainable?

Refinancing can be positive if it improves affordability, but repeated refinancing can suggest pressure.

What if you keep refinancing personal loans?

Repeated refinancing may concern lenders.

It can suggest that debts are not being paid down.

The lender may review:

• original purpose
• current balance
• whether balances increased
• whether debt was consolidated
• whether cards were closed
• whether spending behaviour changed
• whether repayment conduct improved

A clear explanation and improved conduct can help.

What if you have several personal loans?

Multiple personal loans can significantly reduce borrowing power.

A lender may assess each repayment.

They may also consider the overall risk of:

• high unsecured debt
• multiple recent credit enquiries
• reliance on borrowed funds
• weak savings
• limited surplus income
• debt-to-income ratio pressure
• cash-flow stress

Paying out or consolidating some debts may help, depending on LVR and policy.

What if you have both personal loans and credit cards?

This is common.

The lender may include:

• personal loan repayments
• credit card limit repayments
• car loan repayments
• overdraft limits
• buy now pay later commitments
• proposed mortgage repayment

Credit card limits can reduce borrowing power even if the balances are low.

Reducing unused card limits may help more than expected.

What if you have a personal loan and HECS/HELP?

The lender may include both.

HECS/HELP affects income through compulsory repayment thresholds, while a personal loan is a fixed commitment.

Together they can reduce borrowing capacity.

The lender may assess:

• gross income
• tax and HECS repayment
• personal loan repayment
• other debts
• living expenses
• proposed mortgage repayment

The combined impact can be significant.

What if you have a personal loan and buy now pay later?

Buy now pay later may also be included depending on provider, structure and lender policy.

The lender may assess:

• monthly instalments
• credit limit
• payment history
• account conduct
• frequency of use
• whether facilities are being closed

Even small commitments can matter when servicing is tight.

What if the personal loan was used to consolidate credit cards?

This may be viewed positively if the cards were closed and conduct improved.

A lender may ask:

• which debts were consolidated?
• are the credit cards closed?
• has the personal loan been paid on time?
• has the balance reduced?
• are there new credit card balances?
• has spending behaviour changed?

If credit cards remain open and balances build again, the lender may be more cautious.

What if you consolidated debt but did not close cards?

This can be a problem.

The lender may include:

• the personal loan repayment
• the credit card limits
• any new card balances

This can reduce borrowing power and suggest that consolidation did not solve the underlying issue.

If cards are not needed, reducing or closing them may improve the application.

What if the personal loan repayment is high because the term is short?

A short-term personal loan can have a high repayment.

This can significantly reduce borrowing power while it remains active.

Options may include:

• waiting until the loan is paid out
• paying it out early
• refinancing it to a lower repayment
• consolidating it, where appropriate
• reducing the mortgage loan amount
• choosing a lender with suitable policy

Extending a personal loan may improve monthly cash flow but can increase total interest.

What if the repayment is low but the balance is high?

A low repayment may help servicing, but the balance still matters.

The lender may consider:

• debt-to-income ratio
• remaining term
• interest rate
• whether the repayment is interest-only
• whether there is a balloon
• whether the debt is really reducing
• overall debt exposure

A low repayment is not always enough if total debt is high.

Does debt-to-income ratio matter?

Yes.

Debt-to-income ratio compares your debts to your income.

A personal loan can increase total debt and push the DTI higher.

The lender may consider:

• mortgage debt
• personal loan balance
• car loan balance
• credit card limits
• overdraft limits
• other liabilities

High DTI applications can face more scrutiny or lower borrowing limits.

Can paying out a personal loan improve DTI?

Yes.

Paying out and closing a personal loan reduces total debt and may improve DTI.

This can help where:

• income is moderate
• debts are high
• LVR is high
• the application is near lender limits
• LMI applies
• credit card limits are also high

However, the deposit impact still needs to be considered.

Can personal loans affect lenders mortgage insurance?

Yes, indirectly.

LMI providers assess the overall risk of the application.

A personal loan can affect:

• serviceability
• debt-to-income ratio
• savings
• credit conduct
• repayment history
• deposit strength
• unsecured debt exposure
• overall affordability

A clean, well-managed personal loan is less concerning than one with arrears or recent hardship.

Can personal loans affect first-home buyers?

Yes.

First-home buyers often have smaller deposits and may be borrowing near their limit.

A personal loan can affect:

• maximum borrowing capacity
• LMI approval
• government scheme lender approval
• funds to complete
• genuine savings
• deposit strategy
• monthly cash flow

If you are buying your first home, clearing or reducing personal debt early can help.

Can personal loans affect the First Home Guarantee?

The First Home Guarantee does not remove the lender’s need to assess debts.

Even if you meet scheme eligibility, the lender still includes personal loan repayments in servicing.

A personal loan can affect:

• borrowing power
• approval amount
• serviceability
• debt-to-income ratio
• funds to complete
• LMI alternative assessment

Scheme eligibility and loan approval are separate.

Can personal loans affect guarantor loans?

Yes.

A guarantor may help with security or deposit, but the borrower still needs to afford the loan.

The lender will assess:

• borrower income
• personal loan repayment
• credit card limits
• living expenses
• proposed mortgage repayment
• other debts

A guarantor does not remove personal loan commitments from servicing.

Can personal loans affect investment loans?

Yes.

If you are buying an investment property, personal loan repayments still reduce borrowing capacity.

The lender may assess:

• personal income
• existing home loan
• personal loan repayment
• rental income
• investment loan repayment
• negative gearing treatment
• other debts

A personal loan can reduce the size of investment loan you can obtain.

Can personal loans affect refinancing?

Yes.

When refinancing, the new lender reassesses your debts.

A personal loan can affect:

• whether the refinance services
• whether cash out is available
• debt consolidation options
• reduced-buffer refinance eligibility
• LVR
• DTI
• statement requirements
• repayment history review

If your personal loan started after your original home loan, your refinance options may be different.

Can personal loans affect equity release?

Yes.

If you want to release equity, the lender still assesses affordability.

A personal loan can reduce:

• borrowing capacity
• cash-out amount
• serviceability surplus
• refinance options
• ability to consolidate debt

The property may have enough equity, but the loan still needs to service.

Can personal loans affect construction loans?

Yes.

Construction loans are assessed using proposed repayments and building costs.

A personal loan can reduce borrowing capacity for:

• land purchase
• construction loan
• progress payments
• funds to complete
• contingency
• servicing during construction

If the personal loan reduces surplus income too much, the construction loan may be declined.

What documents may lenders request?

Depending on the application, lenders may request:

• personal loan statement
• car loan statement
• repayment schedule
• payout letter
• loan contract
• letter of offer
• transaction history
• credit report
• bank statements showing repayments
• evidence loan is closed
• settlement payout instructions
• explanation for recent loans
• hardship or arrears explanation, if relevant

The exact documents depend on the lender, credit reporting data and whether the loan is being retained or cleared.

What should a personal loan statement show?

A useful statement should show:

• account holder name
• lender name
• account number
• current balance
• repayment amount
• repayment frequency
• interest rate, where available
• payment due dates
• repayment history
• arrears position
• loan term
• payout figure, if relevant

The lender may need enough information to verify both the commitment and account conduct.

What if the lender asks for a payout letter?

A payout letter usually confirms the amount needed to clear the loan.

It may include:

• payout amount
• expiry date
• account details
• interest calculation
• fees
• early repayment charges
• settlement instructions
• confirmation of secured asset release, if relevant

A payout letter is especially important if the debt is being consolidated or paid out at settlement.

What if the lender asks for repayment history?

Repayment history helps the lender assess conduct.

They may review:

• on-time payments
• missed payments
• late fees
• dishonours
• arrears
• hardship arrangements
• regularity of repayments
• whether the account is up to date

Good repayment history supports a stronger application.

What if no statements are required?

Some lenders may not request statements if credit reporting data is sufficient.

However, they may still ask for statements if:

• the loan is being refinanced
• conduct is unclear
• the account is new
• repayment history is missing
• credit report information conflicts with declared liabilities
• arrears are suspected
• the loan is not shown on credit reporting

Document requirements can change depending on the file.

10 common mistakes with personal loans and home loans

1. Do not assume a personal loan will be ignored.
2. Do not forget car loans or hire purchase agreements.
3. Do not take a new personal loan before settlement.
4. Do not use a personal loan as a deposit without checking policy.
5. Do not pay out a loan if it leaves you short on deposit.
6. Do not consolidate debt and keep rebuilding credit card balances.
7. Do not hide a loan because it is paid by someone else.
8. Do not assume a nearly finished loan will automatically be excluded.
9. Do not ignore late repayment history.
10. Do not apply before checking whether servicing works with the debt included.

How to improve your chances of approval

Before applying, it helps to review your personal loans clearly.

Useful steps include:

• list all personal loans and car loans
• confirm balances and repayments
• check remaining terms
• obtain recent statements
• check repayment history
• identify loans close to payout
• consider whether any debts should be cleared
• avoid new debts before settlement
• reduce unused credit card limits
• prepare payout letters if consolidating
• disclose all liabilities upfront
• compare lender policy before applying

Good preparation can prevent delays and improve borrowing capacity.

Should you wait before applying?

Sometimes waiting can help.

Waiting may improve your options if:

• the personal loan is nearly paid off
• you recently missed a repayment
• you recently opened a new loan
• you are about to pay out a debt
• credit report details need updating
• savings need rebuilding after payout
• borrowing power is tight
• LMI applies

You may not need to wait if:

• the repayment is affordable
• the loan is up to date
• income is strong
• deposit is sufficient
• the application services comfortably
• lender policy accepts the debt

A broker can compare applying now versus waiting.

Example scenarios

Scenario 1: Small personal loan and strong income

You have a $6,000 personal loan with a modest repayment and clean conduct.

The lender includes the repayment, but your income is strong enough and the home loan still services.

Scenario 2: Large car loan reducing borrowing power

You have a $55,000 car loan with a high monthly repayment.

The lender includes the repayment, reducing the amount you can borrow for a home.

Scenario 3: Loan almost paid off

Your personal loan has two repayments left.

The lender asks for evidence of the remaining term or payout before deciding whether it can be excluded.

Scenario 4: Debt consolidation refinance

You refinance your mortgage to pay out personal loans and credit cards.

The lender requires payout figures and may require the credit cards to be closed.

Scenario 5: Personal loan used as deposit

You take a personal loan for deposit funds.

The lender includes the repayment and may not treat the funds as genuine savings.

Scenario 6: Recent late repayment

You had a missed personal loan repayment last month.

The lender asks for an explanation and reviews whether the account is now up to date.

So, can you get a home loan with a personal loan?

Yes, you may be able to get a home loan with a personal loan.

The strongest applications usually have:

• stable income
• affordable personal loan repayment
• clean repayment history
• loan disclosed upfront
• no recent arrears
• no hardship arrangement
• manageable credit card limits
• sufficient deposit
• realistic living expenses
• lender policy that accepts the overall position

A personal loan does not automatically stop approval, but it can reduce borrowing power and may need to be paid out if the mortgage only services without it.

Need help getting a home loan with a personal loan?

A mortgage broker can help compare lenders that may consider borrowers with personal loans, car loans, hire purchase, debt consolidation loans, unsecured debts and other fixed repayment commitments.

We can review your income, personal loan repayment, credit card limits, deposit, LVR, repayment history and borrowing power before you apply.

If you have a personal loan and want to buy or refinance, speak with a mortgage broker who understands how different lenders assess existing debts and debt consolidation.