Buy Now, Pay Later: Could It Affect Your Home Loan Approval?
Buy Now, Pay Later (BNPL) services like Afterpay sound convenient, right? Split your purchases into smaller, interest-free instalments and avoid paying upfront – what’s not to love? It’s no wonder BNPL has exploded in popularity, with transactions in Australia expected to jump from $17 billion in 2023 to over $30 billion by 2029.
But here’s the catch: recent changes to BNPL regulations could impact your borrowing power if you’re planning to buy a home.
What’s Changed?
Until recently, BNPL providers weren’t bound by Australia’s credit laws. Signing up was easy, with little to no checks on whether you could afford repayments. This led to concerns about overspending and financial stress. In fact, ASIC found:
- 1 in 5 BNPL users cut back on essentials like food to make repayments.
- 1 in 6 took out another loan just to cover BNPL debts.
To address this, the government stepped in. From June 2025, BNPL providers must:
- Hold an Australian Credit Licence
- Conduct affordability checks
- Follow responsible lending guidelines
And here’s the big one: missed BNPL payments can now appear on your credit report, just like a credit card default.
How Does BNPL Affect Your Home Loan?
When you apply for a home loan, lenders review your credit report and score. Missed BNPL payments can signal financial risk and hurt your chances of approval. Even if you pay on time, heavy BNPL use might raise red flags about your spending habits.
Occasional BNPL use? Probably fine. But if you rely on it often or miss payments, it could cost you your dream home.
What Can You Do?
If buying property is on your radar:
- Pay off outstanding BNPL balances
- Reduce reliance on BNPL
- Close unused accounts and lower credit limits
Check your credit report through:
- Equifax Australia
- Experian
- illion
Make sure your BNPL activity is accurate. If you spot errors, dispute them with the credit reporting body.
Why Speak to Your Broker First?
Don’t put off finding out if you are eligible – talk to your mortgage broker. At Fox Mortgage Services, we help you understand how your spending habits affect your borrowing power. A quick chat can save you time, stress, and even money by ensuring your application is strong from the start.
Ready to take the next step?
We’re here to guide you through the process and help you prepare for a successful home loan application. Get in touch today and let’s make your property goals happen.