Is Your Buy Now, Pay Later Habit Affecting Your Mortgage Chances?
Brokers have warned that using buy now, pay later (BNPL) services might reduce your chances of getting a mortgage approval.
Impact on Borrowers
According to an exclusive survey with brokers shared on the Money blog, borrowers with a “perfect credit score” but several BNPL transactions have had mortgage applications declined. Several brokers noted that frequent use of BNPL services contributed to rejections by major high street lenders.
Calls for Change
Brokers are urging lenders to reconsider how they evaluate prospective borrowers, especially when BNPL payments appear on credit files.
“A client’s regular use of BNPL services was a factor in their rejection by a high street lender,” brokers revealed.
Response from BNPL Companies
In response to these concerns, two leading BNPL providers defended their services as innovative and suggested that the wider financial industry should adapt accordingly.
How BNPL Works and Its Popularity
- BNPL schemes allow customers to spread payments interest-free over time.
- Nearly 11 million Britons use these services, according to the Financial Conduct Authority.
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Summary: Frequent use of buy now, pay later services may negatively influence mortgage approvals, prompting calls for lenders to update their evaluation criteria.
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