The hidden danger potentially stopping you from owning your own home
The Buy Now Pay Later sector is winning-over the youth demographic with the promise of instant gratification. But, with every sugar-high comes the risk of a corresponding low.
‘Buy Now Pay Later’ providers such as AfterPay and Zip Pay have experienced massive growth in popularity. The number of users jumping from 400,000 to approximately 2 million between 2015 and 2018.
Driven by a simple proposition the Buy Now Pay Later provider pays the merchant on behalf of the customer. The customer obtains the goods or receive a service immediately while paying off the debt through instalments. Buy Now Pay Later presents a tempting offering.
But as the sector’s breakneck growth continues, particularly in the younger demographic be cautious. Overdoing it could risk effect your chances of securing a home loan further down the track.
Utilising this payment method may potentially send the wrong message to a bank.
Frequent ‘buy now pay later’ payments on your bank statements can trigger more questions about your spending habits( not good). Ultimately it may mean they choose to decline the application.
If you’re concerned about your spending or if you can get a home loan, a conversation with Paul could set you on the right path.
It’s important to manage your expenses well in advance of applying for a home loan. You can then show the bank that you can save and afford to service a mortgage when the time comes.
ASICS Money Smart Planner is a good place to start. https://moneysmart.gov.au/budgeting/budget-planner