Does Buy Now, Pay Later (BNPL) impact your home loan approval?

Buy Now, Pay Later (BNPL) services like Afterpay and Zip have become hugely popular in Australia. They make shopping easy by splitting purchases into smaller, interest-free instalments provided you pay on time.

It’s no wonder BNPL is booming. In fact, the value of BNPL transactions in Australia is expected to grow from $17 billion in 2023 to $30.71 billion by 2029.

But if you’re planning to buy a home, BNPL could impact your borrowing power. Recent changes to BNPL regulations mean your spending habits might now affect your home loan approval. Here’s what you need to know.

What’s changed with BNPL?

Until recently, BNPL providers operated outside Australia’s credit laws. Signing up was easy—no checks on whether you could afford repayments.

This led to concerns about overspending and financial stress. ASIC found:

• 1 in 5 BNPL users cut back on essentials like food to make repayments.
• 1 in 6 took out another loan to cover BNPL debts.

To address this, the government introduced new rules. From June 2025, BNPL providers must:

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

Missed BNPL payments can now be reported to credit bureaus, just like a credit card default.

How BNPL can affect your home loan

When you apply for a home loan, lenders check your credit score and credit report. With mandatory reporting in place, missed BNPL payments will appear on your credit file.

Even if you pay on time, frequent BNPL use can raise red flags. Lenders may see it as a sign of financial stress or poor money management.

Bottom line:

• Occasional BNPL use, paid on time, is unlikely to derail your home loan.
• Regular missed payments or heavy reliance on BNPL could hurt your chances.

What should you do?

If you’re planning to buy property:

• Pay off any BNPL balances
• Reduce reliance on BNPL and close unused accounts
• Lower BNPL credit limits where possible
• Check your credit report through:
  • Equifax Australia
  • Experian
  • illion

Make sure your BNPL activity is accurate. If you spot errors, contact the credit reporting body to fix them.

Need help?

Understanding how BNPL affects your credit profile is key before applying for a home loan. If BNPL is becoming hard to manage, speak to a financial adviser or counsellor for guidance.

When you’re ready to explore home loan options, FinancePath is here to help. We’ll guide you through the process and help you prepare a strong application.

Get in touch today and take the next step toward home ownership.