Buying a Home? Here’s How to Manage Your BNPL Before You Apply

If you’ve ever split a purchase through Afterpay, Zip or Klarna, you’re not alone. Millions of Australians use Buy Now Pay Later services every month. It’s quick, convenient and feels harmless enough for smaller purchases.

But here’s something many people don’t realise: your BNPL habits could affect your chances of getting a home loan.

With new regulations taking effect in June 2025, lenders now have a clearer view of your BNPL activity than ever before. The good news? A bit of preparation can help you stay on track. This guide walks you through practical steps to manage your BNPL accounts before you apply for a mortgage.

Understanding How Lenders View Your Spending Habits

Before diving into what you should do, it helps to understand why lenders care about BNPL in the first place.

What Changed in June 2025

BNPL services are now regulated under the National Consumer Credit Protection Act. This means providers like Afterpay and Zip must conduct proper credit assessments and report your account activity to credit bureaus.

In simple terms, your BNPL accounts, credit limits and repayment history are now visible to any lender reviewing your application. If you’re unfamiliar with how these services work, understanding what is buy now pay later is an important first step.

The Role of Debt-to-Income Ratio

When you apply for a home loan, lenders calculate something called your debt-to-income ratio. This compares all your existing debts — including BNPL repayments — against your income.

Even if your BNPL payments seem small, they add up. Those fortnightly installments reduce the amount of money lenders believe you can put towards mortgage repayments. The higher your existing commitments, the less you may be able to borrow.

Common Mistakes That Can Hurt Your Application

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Many home buyers unknowingly make errors that weaken their mortgage application. Here are the most common ones related to BNPL.

Holding Multiple Active Accounts

It’s easy to accumulate BNPL accounts. You might have Afterpay for clothing, Zip for electronics and Klarna for homewares. But to a lender, multiple active accounts can signal poor financial organisation or reliance on credit for everyday spending.

Tracking repayments across several platforms also increases the risk of missing a payment, which brings us to the next issue.

Missing Repayments or Paying Late

Under the new rules, late payments can be reported to credit bureaus like Equifax. A single missed payment might not ruin your application, but it does raise questions. Repeated late payments or defaults can stay on your credit file for up to five years, making approval much harder.

Using BNPL Close to Your Application Date

Timing matters. If you open a new BNPL account or make large purchases shortly before applying for a home loan, lenders may see this as risky behaviour. It suggests you might be stretching your finances at exactly the wrong moment.

Practical Steps to Prepare Your Finances

Now for the good news. With some forward planning, you can put yourself in a strong position before you apply.

Review and Consolidate Your Accounts

Start by listing every BNPL account you have. Check for outstanding balances and note which ones you actually use. Close any accounts that are sitting idle — even if the balance is zero, open credit lines can count against you.

If you have remaining balances, aim to pay them off before submitting your mortgage application. Walking in with zero BNPL debt looks far better than juggling multiple repayments.

Monitor Your Credit File

Your credit file is what lenders see when they assess you. Use free services from Equifax or Illion to check your report. Look for any late payments, defaults or errors that could hurt your score.

Since BNPL activity is now reported, make sure your file accurately reflects your repayment history. If something looks wrong, dispute it before you apply.

Adjust Your Spending Habits

Consider pausing BNPL use for three to six months before your application. Lenders review your recent bank statements closely, and they prefer to see money flowing into savings rather than out to repayments.

This doesn’t mean you need to stop spending altogether. Just avoid splitting purchases and pay for things upfront where possible. It demonstrates financial discipline.

Be Transparent With Your Broker

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Don’t try to hide your BNPL commitments. A good mortgage broker will review your bank statements anyway and spot any repayments. Being upfront from the start allows them to give you accurate advice.

Working with experienced mortgage brokers in Camberwell can help you understand exactly how your BNPL usage affects your eligibility and which lenders suit your situation. Different lenders have different policies, and a broker can match you with ones that take a more flexible approach.

What Lenders Actually Want to See

Understanding lender expectations helps you prepare more effectively. Here’s what works in your favour.

Clean Repayment History

Lenders love consistency. A track record of on-time payments across all your credit products — including BNPL — shows that you manage money responsibly. No defaults, no collections activity, no surprises.

Manageable Debt Levels

Low or zero BNPL balances at the time of application make a strong impression. The same goes for credit cards — consider reducing your limits to the minimum you actually need.

Evidence of Financial Discipline

Regular savings deposits over several months tell a positive story. Lenders want to see that you can set money aside consistently, not just scrape by between paydays. Stable employment and minimal unnecessary spending in your bank statements also help.

Conclusion

Using BNPL doesn’t automatically disqualify you from getting a home loan. Plenty of Australians with Afterpay or Zip accounts successfully buy property every year. What matters is how you manage those accounts in the lead-up to your application.

Take stock of your BNPL usage now. Close what you don’t need, pay off what you owe and give yourself a few months of clean spending before you apply. With the right preparation, you’ll walk into your mortgage application with confidence.

Frequently Asked Questions

Does using Afterpay affect my home loan application?

Yes, it can. Lenders now see your BNPL accounts during their assessment, including your repayment history and any outstanding balances. However, responsible use with no missed payments typically has minimal impact on your approval chances.

Should I close my BNPL accounts before applying for a mortgage?

Closing unused accounts can improve your debt-to-income ratio, which helps your application. Make sure to pay off any remaining balances first. A mortgage broker can advise whether closing specific accounts makes sense for your situation.

Can a mortgage broker help if I have BNPL debt?

Absolutely. Brokers compare lenders with different policies on BNPL and can recommend ones more suited to your circumstances. They also provide strategies to strengthen your application and help you avoid common mistakes.

How long before applying should I stop using BNPL?

Aim for at least three to six months of bank statements without BNPL activity. Lenders review your recent spending patterns closely, so giving yourself this buffer provides more flexibility and shows consistent financial habits.