This part of Melbourne is a popular choice for market entrants, so it is no surprise that our team has gained a great deal of experience in assisting first home buyers along that path over the years. As a result, we find ourselves coming across a number of “insider’s tips” from time to time, helping our clients to gain an edge in this competitive market segment. Today’s post is one of these.

One key piece of advice we provide to anyone who is trying to maximise their borrowing capacity when buying their first home is to pay close attention to four little letters…BNPL. If you’re not familiar with these letters, they stand for ‘Buy Now Pay Later’, and an increasing number of Victorians have been using a BNPL facility to purchase a wanted item, then paying it off over the following months.

As many people would be aware, access to many of these BNPL facilities can be as simple as clicking a button or two when buying online. It’s extremely easy to access, but what many people don’t realise is that it can have a serious impact on your credit record…particularly when the time comes to apply for your first home loan.

If you talk to an experienced independent Mortgage Broker, they will tell you that having a Buy Now Pay Later facility with as little as a $1000 limit could result in a reduction in your borrowing power of as much as $120,000…and no that’s not a typo! Here’s how.

You see, while various Banks have different ways of dealing with BNPL facilities, many treat them as though you will have to pay off the whole limit each month. Their lending policy will assume that you could max it out each month, and therefore need to pay $1000 towards it each month. While some Banks will factor in minimum monthly repayments on a credit card, they will view a BNPL differently.

So, if they assess your home loan repayment ability as being reduced by that $1000 per month, it can have a huge impact on the total amount they will lend you.

We hope this timely tip is of assistance if you’re preparing to buy your first home, but don’t overlook the value of a chat with an experienced Mortgage Broker to put yourself in the best possible position to apply for a home loan.

Of course, if you need any assistance or guidance in achieving that home ownership goal, our team at Barry Plant Gladstone Park is always happy to provide obligation-free advice on 9330 1088.

Cheers,

Bill Karp - Director

Barry Plant Real Estate

Gladstone Park