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For many first-time homebuyers, careful financial planning, steady employment, and a healthy savings account seem to be the keys to securing a home loan. However, as one young Sydney buyer discovered, even small debts linked to financial apps can unexpectedly interfere with that dream. Despite having saved more than $100,000 and maintaining a full-time job, this buyer was denied a home loan due to a minor debt from a ‘buy now, pay later’ service.
This Sydney buyer had worked hard to accumulate enough savings for a $500,000 property. While they expected their student loan debt to reduce their borrowing capacity, they were caught off guard when a $16 Afterpay debt was the reason for their loan rejection.
Despite having an impeccable payment history with the app over several years, lenders flagged the outstanding balance as a risk. They required the account to be closed, and a confirmation of its closure to be provided, before the application could proceed. Read the full article here: News Article
This example illustrates how even minimal debts from financial apps like Afterpay or Zip Pay can negatively impact your borrowing power. Lenders include these balances in their assessments, which can lead to a lower loan approval or, in some cases, outright rejection.
Before applying for a home loan, it’s important to thoroughly review your financial commitments, including any balances tied to ‘buy now, pay later’ apps. Even seemingly insignificant amounts can raise red flags with lenders. First Home Buyer Specialists and First Home Buyers Agents advise potential buyers to clear such debts and ensure their financial profile is as strong as possible before starting the loan application process.
Navigating the home loan process is complex, especially when unexpected factors like financial app debts are involved. A First Home Buyers Agent or First Home Buyer Specialist can help identify and resolve potential issues before they affect your ability to secure a loan.
These professionals review your financial situation early on and guide you through the process, advising on which debts should be addressed to increase your borrowing capacity and improve your chances of approval.
Small financial habits, such as using ‘buy now, pay later’ apps, can have a significant impact on your ability to own a home. By proactively closing these accounts, clearing any outstanding balances, and consulting with an experienced First Home Buyers Agent, you can position yourself more favourably when applying for a loan.
Alon and Chad from First Home Buyer Specialists have years of experience helping first-time buyers navigate these challenges. They provide personalised guidance, helping clients secure their first homes by managing financial obstacles and ensuring that all aspects of the loan process go smoothly.
We are on YOUR side and we’ll support you through the property buying process from start to finish.
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New Property Specialists Pty Limited ABN 34 634 117 776 is an authorised representative (Representative Number 532128) of QED Credit Services Australia Pty Ltd ACN 603 319 268 | Australian Credit License No: 387856
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