The New Reality of BNPL & Mortgages

A broker's quick guide to navigating the shift from "invisible debt" to regulated credit.

The Deadline That Changes Everything

JUNE 10

2025

On this date, Buy Now, Pay Later is officially regulated as a credit product under Australian law. The old rules no longer apply.

Then vs. Now: The Regulatory Shift

BEFORE June 2025

  • ×Often unregulated; no credit licence needed.
  • ×No mandatory affordability checks.
  • ×Defaults were rarely reported to credit bureaus.
  • ×Largely invisible on credit reports.

AFTER June 2025

  • ✓Regulated as 'Low Cost Credit'.
  • ✓Mandatory affordability checks are required.
  • ✓Defaults CAN be reported, impacting credit scores.
  • ✓Visible on credit reports, especially for >$2k limits.

Beyond the Score: Lender Red Flags

Lenders scrutinise bank statements for spending habits. Here's what raises an alarm, even with a perfect repayment history.

🔄

Frequent Use

Signals reliance on credit for daily expenses.

📚

Multiple Accounts

Concerns about financial organization.

❌

Any Missed Payment

Even a minor default is a major red flag.

🎰

Risky Withdrawals

Cash-out at casinos or pubs looks risky.

💸

Overdrawn Accounts

Clear sign of poor cash flow management.

🛍️

Lifestyle Spending

Erodes demonstrable disposable income.

The Real Impact on Borrowing Power

BNPL is a liability that directly reduces a client's disposable income and serviceability. It's not just about the debt amount; it's about the portion of their income it consumes.

How BNPL Erodes Serviceability

Lenders see regular BNPL repayments as a reduction in a client's ability to service a mortgage. This chart illustrates how BNPL liabilities take a slice out of a client's overall financial capacity, even if they never miss a payment.

Disposable Income
BNPL Liability

The Broker's Playbook: A 4-Step Client Action Plan

Guide your clients to mortgage-readiness with this proactive, 3-6 month pre-application strategy.

1

Financial Clean-Up

Advise clients to pause all BNPL use. Consolidate accounts to simplify finances and clean up "red flag" spending from bank statements.

2

Monitor & Review

Encourage clients to regularly check their credit score and review their full credit report for any BNPL-related inquiries or defaults.

3

Manage Expectations

Explain the need for full disclosure of ALL BNPL accounts. Clarify that responsible management is key, not just closing accounts.

4

Demonstrate Stability

The goal is to present a 3-6 month history of disciplined saving, budgeting, and financial stability, proving their capacity to service a mortgage.