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Ever since AfterPay was introduced, it offered convenience in the way we shop but can using it too much affect your credit score? All of a sudden, we have another option for flexible payment available that allows us to pay back the total purchase price in four instalments. While it is convenient to have AfterPay available, it can bring more damage than good if you’re thinking of applying for a home loan.

How does Afterpay really work?

Coronis Financial Services Director Tyson James said that while buy now, pay later services, may seem convenient; it can give the impression that you don’t have enough savings available to live pay to pay. But how does Afterpay affect your credit score?

“There’s a real testament that ‘pay later’ service users tend to have more types of debt and they are more likely to have been declined for credit cards in the past, that’s why they resorted to services like Afterpay,” he said.

“As a result, it prompts credit assessors to consider certain scenarios when reviewing a home loan application for these users like whether you are living within your means, have enough available savings, or if you’re living pay cycle to pay cycle.

“Overusing Afterpay can make your application look like you’re living above your means, which has a negative impression on your profile when you apply for a home loan.”

With no fees and simple approval process, it’s easy to see why Afterpay is so popular. While there are a lot of users who use it within their means, there are also a lot of users to get themselves into bigger debt. The buy now, pay later option can have an impact on your existing accounts and your credit history, especially if you make repayments from your credit card.

If you’re using services like Afterpay, you should look at it as short-term means for repaying rather than rely on it. With tightened lending restrictions, it can be harder to have your application approved. There are even some stories of applicants being denied for a home loan because they spent too much money on UberEats. So if you want to apply for a home loan, you should be extra careful with your credit score, finances and be wise with your spending.

Get in touch with our team of mortgage brokers in Queensland who will help you get your profile sorted and do all the hard work for you to find a home loan that’s a perfect match for you.

First Home Buyer Guide

Everything you need to know to buy a property in one easy guide. This guide is packed full of checklists and tools to help you make the right choice.

But the truth is, every additional percentage point in your home loan interest rate could cost you thousands of dollars every year… and as your home loan is most likely the longest loan you will ever have. If it was a short-term loan, it wouldn’t matter as much… but 30 years is a long time to be paying extra money if you don’t need to.

Real estate is expensive so why would you want to pay more than you have to?

Look at the two below examples:

Loan $500,000 $500,000
Interest Rate 3.8% 4.3%
Term 30 Years 30 Years
Total Principal + Interest $838,800 $890,640

Total savings: $51,840

A difference of 0.5% in your home loan could end up saving you more than $50,000… which means you could pay it off faster!  Like we said, it really adds up over 30 years.

What we’re trying to say is your interest rate matters. You don’t want to pay more than you have to… which is what we’re here to help with.

Our team of mortgage brokers have access to more than 40 lenders and are experts are finding the right lending solution for your needs.

If you would like to book an appointment, contact us today.

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