Mortgage brokers are urging prospective home loan borrowers to be mindful of how Buy Now, Pay Later (BNPL) loans could affect their credit standing and ability to secure a mortgage. While credit cards are traditionally the most significant factor in a lender’s credit assessment, BNPL exposure is increasingly coming under scrutiny. Julian Finch, a mortgage broker and financial adviser, highlights that BNPL services are often not declared by consumers as credit facilities. Nonetheless, they are treated similarly to credit cards by lenders. These services, typically approved without rigorous due diligence, can significantly impact a borrower’s capacity to obtain a mortgage. A risk officer at a major bank affirmed this, stating that BNPL debt is counted alongside credit card limits and other approved credit facilities during credit assessments. Often, lenders advise applicants to close or reduce credit card limits, but BNPL usage may go unnoticed unless disclosed by the applicant, complicating the borrowing process.
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