Buy Now, Pay Later This Christmas? Here’s What You Need to Know

Buy Now, Pay Later This Christmas? Here’s What You Need to Know | 2-Minute Read

The countdown to Christmas is on! As we shop for loved ones, it’s easy to get swept up in festive spending. Many online retailers now offer Buy Now, Pay Later (BNPL) options at checkout, making it tempting to spread the cost of gifts.

But before you click that button, it’s important to understand what it could mean for your credit rating and even your future mortgage application!

The hidden risks of Buy Now, Pay Later

BNPL schemes like Klarna, Clearpay and VeriPay might seem convenient, but they’re still a form of borrowing. Many people don’t realise that these short-term loans can appear on your credit file, and some lenders may see regular use as a sign of financial strain.

Our Financial Services Director, Gavin Welch says, “If you’re finding you can’t afford to buy certain things this month, putting it on Buy Now Pay Later might not be the best solution. Lenders see this as a sign you could be stretching your finances. My advice is, if you can’t afford it, keep the money in your pocket and wait. It’s far better to protect your credit rating and your mortgage prospects.”

How can it affect your mortgage application?

When applying for a mortgage, lenders don’t just look at whether you’ve missed payments they also assess how you manage money month-to-month. If your spending shows frequent use of BNPL or payday loans, it could suggest over-reliance on credit.

If you’re hoping to move home or remortgage soon, consider keeping borrowing to a minimum and clearing any outstanding BNPL balances as soon as possible. A stable financial profile makes a big difference when lenders are assessing your application.

To learn more.

Smart spending tips for a stress-free Christmas

• Set a budget early, know your limits before the shopping starts.
• Avoid impulse buys, those “limited time” deals are designed to tempt you.
• Use savings where possible, paying upfront means fewer January worries.
• Keep your credit clean, lenders favour consistent and responsible money management.

It’s easy to get caught up in the magic of the season, but a little restraint now can protect your financial wellbeing and help you achieve your homeownership goals in the new year.

If you’d like to discuss your mortgage options or check how your current finances might impact future borrowing, our friendly team is here to help.

FAQ’s:

• Q: Does Buy Now Pay Later affect my mortgage application?
• A: Yes, lenders may view regular Buy Now Pay Later plan use as a sign of financial strain, which can affect your application.

• Q: Should I avoid BNPL if I plan to buy a home?
• A: Limiting Buy Now Pay Later plan use can help keep a healthy credit profile and improve your mortgage prospects.