Speaker 1 0:10

Kia ora and welcome back to Kunsh Shears today . Hello Kunsh Kia ora , everybody . Hello . Today we are diving into a hot topic of Afterpay , laybuy , zip and other buy now , pay later services and how they affect your chances of buying a home Now . Buy now , pay later is super convenient , but could it be quietly sabotaging your mortgage application . Let's break it down . So , conch

Episode Introduction

Speaker 1 0:38

, let's quickly cover how this facility like Afterpay actually works .

Speaker 2 0:45

Well , buy now , pay later . Allow you to split payments into small installments , interest-free . Unlike credit cards , they don't charge interest , but they have late fees . Services in New Zealand include Afterpay , layby , now ZipPay and

How Buy Now Pay Later Works

Speaker 2 1:04

Whom Wow , yeah , so there's a few out there , lots of selections , and I think there's also Genopay and Klarna . I think I've seen Klarna around , yeah , a few new ones popping up as well . We've seen some leave the market as well , but some also coming on board .

Speaker 1 1:25

Do you use it yourself ? Do you have Afterpay ?

Speaker 2 1:28

No , okay .

Speaker 1 1:29

I close them all down .

Speaker 2 1:31

Once I realized

Impact On Mortgage Applications

Speaker 2 1:32

it affects your borrowing capacity , I kind of closed them all down .

Speaker 1 1:37

Yeah , so here are where things get interesting right for clients and listeners . How do banks actually view buy now , pay later usage on the servicing calculations ?

Speaker 2 1:51

Yeah , so buy now , pay later , is considered a form of debt . So even though it's interest free , lenders review it as a commitment . They can see it coming out of your bank statements . So frequent transactions will lower your borrowing capacity for a loan , for a loan .

Speaker 1 2:13

Yeah , and it's also not really a good sign , because if you're using a lot of those facilities , it looks like you're living paycheck to paycheck . Yeah , so you're not actually budgeting for things properly , you're not putting money aside . But you know what's scary

Managing BNPL When House Hunting

Speaker 1 2:25

is like ? I see those facilities now advertised through things like supermarket grocery shopping , yes , right and deliver easy . Yeah , you can do afterpay ?

Speaker 2 2:35

Yeah , people are using afterpay to purchase their groceries .

Speaker 1 2:39

Which is opening up for the temptation of let's just not budget , yes , let's just , you know , go out , buy whatever we want and just put it on afterpay , and you're just digging a bigger hole for yourself .

Speaker 2 2:50

That's how I see it personally and there's impacts on your credit score as well . With those , buy now , pay later .

Speaker 1 2:57

Yeah . And look , guys , it's not the end of the world . If you do have it right now Like there are some people saying out there that you should not have any facilities for at least six months before applying for a mortgage but not necessarily the truth we can put it as part of your application and say to the bank look , by the time they buy a house , they will be able to shut it down . Yes , yeah absolutely .

Speaker 2 3:18

It's not going to stop an application from going through or anything like that . It's just the level of borrowing that you might be able to not borrow as much as you want .

Speaker 1 3:31

Yeah , correct . So remember , guys , this is not a financial advice . This is us just sharing some tips . But one of the other tips is basically , if you do want to keep it open , make sure you've paid it all off or you're not paying late fees , because that just adds up .

Speaker 2 3:49

Yep , keep your full payments , keep discipline with those payments , so that just shows good management of it . And then , yeah , we can still put application through with those buy now , pay later limits .

Speaker 1 4:03

Yep , and we've helped plenty of clients to get ahead in life while still using those facilities . So that's not the end of the world . But if you've got your own thoughts on this , message us and comment below or text us , and we should be able to get your thoughts on it . So don't forget , you can find us on Facebook , youtube and Instagram , and we're here to help .