The pitfalls of buy now, pay later

Used carefully, BNPL can be a way to make purchases without the added cost of interest. But Mozo says that amid the COVID-19 pandemic, nearly 2 million BNPL users are uncertain how they will make future payments. Half of users are buying essential items using BNPL.


A review by our money watchdog – ASIC, dished up other concerning findings.2

Six out of ten BNPL users are aged under 34, and more than half say these arrangements allow them to buy more expensive items than they normally would, and spend more than usual.


What is less well-known is that BNPL can impact your ability to take out a home loan.

Lenders are looking closely at the spending habits of loan applicants. And while digital spending may not be considered as credit facilities, a bank will likely want to know if your BNPL spending could hinder your ability to manage home loan repayments.


The number one rule with BNPL – as with any type of spending, is to think a purchase through: can you afford it, and do you really need it? Remember, at some stage your buys need to be paid off.

Ideally, link your BNPL account to your everyday account – not your credit card. This way you won’t end up paying interest on purchases. Importantly, limit yourself to one BNPL account. The fewer you have, the easier it is to track and manage your spending.

Above all, if you’re in the market for a home loan, it can pay to go easy on non-essential spending – no matter how you pay for it. That way, the numbers can stack up in your favour when you apply for a home loan.


Give us a call today. We can help you start to plan your property goals now to reach your home ownership goals sooner.