New BNPL Rules in 2025: What They Mean for Your Home Loan Application
Introduction
From 10 June 2025, Buy Now Pay Later (BNPL) services in Australia are officially regulated under national credit laws. This change means BNPL activity is now assessed more closely by lenders when reviewing home loan applications.
If you are planning to apply for a mortgage, it’s important to understand how these new rules could influence your eligibility and borrowing capacity. In this blog, we outline the key changes, what lenders look for, and how you can prepare your finances.
Key takeaways
- BNPL is now regulated under national credit laws from 10 June 2025.
- All BNPL providers must now hold an Australian Credit Licence.
- Credit and affordability checks are now required before BNPL approval.
- Even unused BNPL credit limits are treated as potential liabilities.
- Avoid signing up for new BNPL services before applying for a mortgage.
- Make all BNPL repayments on time to avoid negative reporting.
Understanding Buy Now Pay Later (BNPL)
BNPL services allow consumers to split the cost of a purchase into smaller, scheduled repayments, often over four to six weeks. These repayments are usually interest-free, provided they are paid on time.
The value of BNPL transactions in Australia is expected to reach $11.29 billion from 2023 to $20.39 billion by 2029. This growth reflects the increasing popularity of BNPL as a flexible payment option, especially for online shopping.
However, this rapid expansion also raises concerns. Consumers who miss repayments may face late fees, and relying too heavily on BNPL can lead to overspending or accumulating multiple short-term debts.
BNPL and credit cards: Similarities and differences
Though marketed as different, BNPL and credit cards share several characteristics from a lender’s perspective.
Similarities:
- Both BNPL and credit cards allow you to make purchases now and pay later.
- Both can now affect your credit score, depending on how responsibly you use them.
- Missed payments on either can result in late fees and credit score damage.
- Both require financial discipline to avoid overspending or falling into debt.
- Both now fall under consumer credit laws in Australia and are subject to regulation.
Differences:
- BNPL splits payments into fixed instalments; credit cards offer flexible monthly repayments with a revolving balance.
- BNPL was previously unregulated but now requires credit checks for larger purchases; credit cards have always required checks.
- BNPL is limited to partnered merchants; credit cards are accepted almost everywhere.
- Credit cards offer perks like points, insurance, and fraud protection; BNPL rewards are minimal or limited to select programs.
- BNPL account setup used to be instant; now it may involve income checks and approval delays, while credit card applications are more formal from the start.
BNPL reforms 2025
As of 10 June 2025, Buy Now Pay Later (BNPL) services are regulated under Australia’s national credit laws. These changes are designed to protect consumers and ensure more responsible lending practices across the industry. Here are the key updates that may affect how you use BNPL:
1. BNPL providers now require a credit licence
All BNPL companies are now operating under an Australian Credit Licence similar to banks, credit card issuers, and mortgage brokers. This change means providers are held to national lending standards, with increased accountability and oversight.
2. Credit and affordability checks apply
Before approving new purchases, BNPL platforms are now expected to assess whether repayments are manageable for each customer. For higher-value transactions (usually above $2,000), more detailed checks may be involved. This is intended to reduce the risk of financial overcommitment.
3. Improved complaints and dispute resolution access
Consumers now have clearer options if something goes wrong. All BNPL providers are part of the Australian Financial Complaints Authority (AFCA), offering an external channel for resolving issues and disputes fairly.
4. Clearer disclosure of fees and terms
There is now a greater focus on transparency. Providers are expected to give clear, upfront information about late fees, repayment terms, and how BNPL usage may appear on your credit report. This helps you make informed choices and understand the risks involved.
Applying for a home loan in 2025?
New BNPL rules can reduce your borrowing power or lead to rejection. At ZedPlus, our loan experts review your credit, identify what’s hurting your application, and help you fix it before you apply.
How will BNPL affect home loan eligibility in 2025?
The home loan assessment process is becoming increasingly data-driven. Lenders use a combination of credit scores, income assessments, bank statement analysis, and spending behaviour to assess risk and repayment capacity. BNPL usage can affect this process in several important ways.
1. BNPL is a liability, regardless of balance
Even if you owe only a small amount on a BNPL account, lenders often consider the total credit limit available to you. For example, if your Afterpay limit is $2,000 but your balance is $200, lenders may still count the entire $2,000 as a potential liability, because you could theoretically draw on the full amount at any time. This reduces your borrowing capacity, as lenders will assume you may already be committed to further repayments, even if unused.
2. BNPL affects your credit score
With mandatory credit reporting now in place, missed BNPL payments can appear on your credit file and reduce your score.
A lower credit score can impact:
- Your eligibility for a home loan.
- The interest rate you are offered.
- The types of lenders willing to consider your application.
Frequent use of BNPL services, especially across multiple platforms, may also be interpreted as a sign of financial stress or over-reliance on short-term credit.
3. Bank statement scrutiny reveals behavioural risk
When assessing home loan applications, banks typically request three to six months of recent bank statements. These are reviewed not just for income and savings, but also for spending patterns.
If your statements show regular BNPL activity, especially for discretionary spending like food delivery, online shopping, or entertainment, this may raise concerns with lenders. It could indicate poor budgeting or dependency on unsecured credit for everyday needs.
4. Reduced net borrowing power
Even small fortnightly repayments to BNPL providers count as ongoing financial commitments. These obligations are factored into debt-to-income (DTI) calculations and can reduce the amount you are eligible to borrow. For instance, a monthly BNPL repayment of $100 could reduce your home loan borrowing capacity by several thousand dollars, depending on your income and existing debt profile.
Case Study: Loan pre-approval withdrawn due to BNPL exposure
Scenario
Emma, a 29-year-old first-home buyer, had saved a $10,000 deposit and earned $75,000 annually. She was pre-approved for a $420,000 mortgage based on her steady income, minimal existing debt, and clean repayment history.
However, just before final approval, the lender reviewed her updated credit report and bank statements, as is now standard practice under the June 2025 BNPL reforms.
Issue
The lender found three active BNPL accounts with a combined credit limit of $3,500. Although Emma had low outstanding balances, the provider limits were treated as unsecured liabilities, which impacted her debt-to-income ratio. The credit file also showed one missed BNPL repayment from earlier in the year, which had slightly lowered her credit score.
Outcome
Due to tightened lending rules and responsible credit obligations, the lender withdrew the pre-approval, citing excessive unsecured credit exposure. Emma was advised to close her BNPL accounts, wait three months, and then reapply with updated statements.
Strategies to protect your home loan application
If you’re applying for a home loan in 2025 or beyond, BNPL services will be treated with the same caution as credit cards or personal loans. Here’s how to manage them wisely:
Review and rationalise BNPL accounts
Go through all your existing BNPL accounts and close any that are unused or duplicated. If possible, ask providers to lower your credit limits. This reduces your total credit exposure and can improve how lenders view your overall financial position.
Avoid new BNPL applications
Refrain from signing up for new BNPL services in the three to six months before applying for a mortgage. Each application may trigger a credit inquiry, which can temporarily lower your credit score and suggest increased reliance on external credit.
Minimise or pause BNPL usage
Avoid using BNPL in the lead-up to your loan application. Use debit cards or direct bank transfers instead. Lenders may flag regular BNPL use, especially for non-essential spending, as a risk factor.
Maintain on-time payment
Set up direct debits or reminders to ensure you never miss a BNPL repayment. Under current credit laws, missed payments can be reported and may affect your credit file, even if the amount is small.
Monitor your credit report
Check your credit file regularly through Equifax, Illion, or Experian. Make sure your BNPL activity is accurately recorded and up to date. Early detection of errors gives you time to correct them before applying for a loan.
Be transparent with your broker or lender
Disclose all BNPL accounts and repayment obligations in your application. If your BNPL usage was temporary or linked to a specific event, provide context so it’s not misinterpreted as ongoing financial strain.
Conclusion
The 2025 reforms have shifted the landscape for BNPL in Australia. What was once viewed as a convenient and flexible payment method is now a regulated credit product subject to the same assessments and expectations as any other financial liability.
By understanding these changes and taking proactive steps, you can reduce the risk of setbacks and approach your loan application with greater certainty.
If you are still unsure how this may affect your borrowing plans, now is a good time to take a closer look. At ZedPlus, our loan specialists help you assess your current position, understand what lenders consider, and guide you through the steps to get ready. With experience in both lending and tax, we help you prepare the right plan for your loan application. Contact us today.
