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BNPL & Your Home Loan: What Every Aussie Needs to Know About the New Rules

  • Key Takeaways

    • Buy Now Pay Later (BNPL) is now officially treated as credit in Australia — so it’s visible to lenders and impacts your home loan and mortgage applications.
    • Every BNPL account, payment, and default is now reported and checked, affecting your credit score, credit report, and even your score over time.
    • Lenders look at your whole financial story, not just your credit score — multiple BNPL accounts or missed payments can raise red flags and increase credit scrutiny.
    • To get mortgage-ready, freeze new BNPL spending, consolidate accounts, clean up your statements, and show 3–6 months of disciplined financial behaviour and timely payments.
    • Mountway’s approach helps you turn these new Responsible Lending rules and Australian BNPL regulations into a strategic advantage — so you stand out as a responsible, trustworthy borrower.

    Used Buy Now Pay Later? Here’s What’s Changed

    If you’ve used Buy Now Pay Later services like Afterpay, Zip, Klarna, or any other BNPL app — listen up. From 10 June 2025, BNPL is not invisible. It’s now officially classed as a form of credit under new Australian BNPL regulations and the Credit Act, with guidance from the Australian Securities and Investments Commission (ASIC). That changes everything in your home loan and mortgage applications journey.

    What This Change Actually Means for You

    Buy Now Pay Later is now treated just like any other credit types. Providers need a credit licence, must do proper affordability checks, join the Australian Financial Complaints Authority (AFCA) for financial complaints, and report any defaults. This is all about Responsible Lending, consumer protection, and better debt management.

    Hard credit checks (sometimes called a credit enquiry) are now triggered when opening new BNPL accounts or increasing limits—meaning your credit score could take a hit right there, and lenders will see your score over time.

    Miss a repayment? That default can show up on your credit file and credit report for up to five years, impacting your repayment history and even your ability to get a credit card or home loan. This is a big impact on loan applications.

    Large balances over $2,000 will be fully visible on your credit report—no more hiding micro-debts. This is part of the government’s push for Comprehensive Credit Reporting and better consumer protection.

    Why Banks Look Twice at BNPL Users

    It’s About Financial Habits, Not Just Numbers

    Forget the latte-factor — they’re not judging you… but they are judging your financial habits.

    A Reuters survey found over 10% of Afterpay users were told to close their BNPL services to get a home loan—and then offered a credit card once approved. Why? Because trust and perceived stability matter. Regular small BNPL payments—especially ones that sniff of budget-stretching — can make lenders nervous.

    ⚠️ Even a single missed $40 payment raises alarms. Usage across multiple BNPL services screams "overextended" and triggers more credit scrutiny.

    Here’s What Lenders Are Actually Evaluating

    They don’t just look at your credit score; they look at your entire financial story:

  • ✅ Frequency and total of Buy Now Pay Later transactions
  • ❌ Any default—even small—can show up on your credit file
  • ➕ Number of different BNPL services
  • 💵 Cash withdrawals at pubs, clubs, casinos
  • 🛍 Subscriptions and lifestyle purchases
  • 🚫 Overdrafts, late fees, and "silent" defaults
  • 🔍 Recent loan or credit card applications

    They’re assessing your financial maturity, not just your credit score. Lenders want to see repayments on time, a clean repayment history, and no signs of Financial Hardship. They also look for auto payments and whether you’re making timely payments on all your debts.


How BNPL Affects Your Borrowing Capacity

The Real Cost of Convenient Payment Options

Every regular BNPL payment chips away at your serviceability buffer—the lender's core calculation of what you can truly afford. Even just $200/month in BNPL repayments could slash tens of thousands off your borrowing power. That’s a big deal when you’re trying to get into your first home.

And while BNPL can feel like a convenient payment option or a way to spread out the cost of purchases with interest-free repayment and payments over time, it can actually limit your financial opportunities if not managed well.

Action Plan: 3–6 Months to Get Mortgage-Ready

Your Step-by-Step Guide

  1. Stop New BNPL Spending
    Don’t let that “free interest” trap you. Freeze new Buy Now Pay Later apps today—even if they promise quick approval.

  2. Consolidate or Close
    Multiple BNPL services? Consolidate or close them. Lenders prefer clear, controlled debt—one tidy line beats scattered micro-loans.

  3. Audit Your Statements
    Cancel subscriptions, curb discretionary spending, avoid overdrafts and casino-style withdrawals. Every dollar matters, especially when unexpected expenses pop up.

  4. Track Credit Health
    Check your credit score (Canstar, Illion) and pull a free credit report. Clear up surprises before lenders find them. This is key for credit building and showing a strong score over time.

  5. Be Transparent
    Declare every Buy Now Pay Later account and loan. Honesty builds your case; hiding debts breaks it.

  6. Create a 3–6 Month Discipline Window
    No BNPL, no overdrafts, no late payments. Show consistent, clean financial behaviour and a strong repayment history—this is what lenders and any good finance professional want to see.

What You’ll Be Saying to Lenders

“Yes, I have Buy Now Pay Later — but it's on pause, and I'm managing it responsibly.”
“I consolidated the accounts; here’s my cleaned-up statement.”
“Here’s my credit report — no surprises or hidden defaults.”
“I’ve demonstrated six months of disciplined behaviour with no new debt.”

This builds trust. Ah — that sweet trust dividend.

Why Mountway’s Approach Puts You Ahead

Turning Regulation Into Your Advantage

You're not just ticking compliance boxes — you’re telling a disciplined story. At Mountway, we turn regulatory hurdles into strategic advantage:

  • You’re ahead of the curve — your application hits clear on day one.
  • You show lenders that you own your financial narrative.
  • You reduce costly delays, stress, and rejections.
  • You set a precedent for how your financial decisions should be made.

It’s a competitive edge built on clarity, accountability, and grit—especially in today’s world of digital finance.

The Hard Truth (But I’ve Got Your Back)

Buy Now Pay Later is not innocent anymore. It's now official credit. Every swipe counts. One lapse can echo for years.

But here’s the good part: with the right strategy, this stops being a threat and becomes a signal of control. Responsible usage now shines.

TL;DR – What You Need to Internalise

MYTH

REALITY

BNPL is invisible It’s credit—reported, checked, visible under the Credit Act and Australian BNPL regulations
I can use it without issue Every payment and default can count on your credit report and affect your score over time
Having accounts is fine Multiple apps = raises suspicion with Responsible Lending rules and more credit scrutiny
Statements don’t matter They tell lenders who you are, not just what you owe—especially with Comprehensive Credit Reporting
Credit score is everything Behaviour and repayment history prove your capacity and help with credit building

What’s Next?

Let’s lock in your strategy:

  1. Freeze new Buy Now Pay Later now.
  2. Clean your financial house over the next 3 – 6 months.
  3. Schedule a credit report review — let's review and refine your application package.

You're not just being prepped; you’re being primed for success.