Can Afterpay affect your ability to buy a house?

BOASTING over 1.8 million customers, Afterpay has rapidly become one of the largest ‘buy now, pay later’ schemes in Australia. Afterpay is an interest-free payment where customers get their purchase instantly and pay off the amount fortnightly. There is no need for proof of income, customers just need a debit card and enough money for the first instalment.

Sounds almost too good to be true, right?

There are risks, of course. Afterpay (and other buy now, pay later schemes such as ZipPay) are technically credit liabilities. If you have trouble meeting the payments and late fees appear on your account, this can affect your ability to borrow large sums of money, like when attempting to take out a home loan.

As the money comes out in multiple payments rather than one single payment, a lender could also consider these as ongoing monthly living expenses that need to be factored in for loan servicing purposes.

In the current lending environment where lenders are reviewing everything with a fine-tooth comb, you need to be aware that all your payments, big and small, may be queried.