Buy Now, Pay Later: could it affect your home loan approval?

Buy now, pay later. Sounds convenient and harmless, right?

It’s no surprise that Buy Now, Pay Later (BNPL) services like Afterpay have surged in popularity as it lets you split purchases into smaller, interest-free instalments (as long as you pay on time).

In fact, the value of BNPL transactions in Australia is expected to jump from about AU $17 billion in 2023 to an estimated AU $30.71 billion by 2029.

But there’s a catch. Earlier this year, significant changes rolled out for how BNPL services are regulated. And if you’re gearing up to buy property, these updates aren’t just background noise – they could directly impact your borrowing power and your path to approval.

What were the changes?

Previously, BNPL services were able to sidestep Australia’s credit laws. Users could sign up easily, with no real checks on your financial situation and ability to pay the instalments.

As a result, there were growing concerns around the number of people overspending and getting into financial trouble. ASIC research found 1 in 5 BNPL users said they had cut back on or went without basic essentials like food to make repayments on time, while 1 in 6 took out an additional loan to cover their repayments.

These concerns have led to the government to step in to regulate BNPL services. From June 2025, BNPL providers in Australia became officially regulated under national credit laws.

BNPL providers must now:

• Hold an Australian Credit Licence
• Conduct affordability checks before approval
• Follow responsible lending guidelines

Notably, missed payments can be reported to credit bureaus and will show up on your credit report, the same way a credit card default might.

How does BNPL affect home loan eligibility?

Banks look at your credit score and credit report as part of your home loan application. With mandatory credit reporting in place, missed BNPL payments can appear on your credit file.

Missed payments can signal financial risk to lenders and impact your ability to get a home loan. Even if you don’t miss BNPL payments, frequent BNPL use could raise red flags, as it may translate to you not being able to manage your finances or being under financial stress.

The bottom line is that occasional use of BNPL services is not going to annihilate your chances of home loan approval, especially if it’s used responsibly and paid on time. However, if you tend to rely on BNPL and regularly miss payments, it may end up costing you your home loan.

What should I do next?

If you’re planning a property purchase, it’s a good idea to get on the front foot and take control of your BNPL spending habits as soon as possible.

Pay off any outstanding balances, reduce your reliance on BNPL, and close any unused accounts. Where possible, reduce your BNPL credit limits, as this can improve how lenders assess your overall financial position.

Additionally, you can check your credit report to see whether your BNPL activity is listed. You can do this through:

• Equifax Australia
• Experian
• illion

Furthermore, ensure that your BNPL activity is accurately recorded and current. If you find errors, raise them directly with a credit reporting body.

Like to chat with a professional?

Understanding how spending habits affect your credit profile is essential before applying for a

home loan. If you feel your BNPL use is becoming difficult to manage, it can be helpful to speak

with a qualified financial adviser or financial counsellor for personalised guidance. They can

support you in getting back on track and strengthening your financial wellbeing.

When you’re ready to look at your home loan options, we’re here to guide you through the

process and help you prepare a strong, confident application. Get in touch whenever you’re

ready to take the next step.