A mortgage expert has issued a stark warning that a widespread online shopping habit could immediately jeopardise homebuying prospects. Buy-now-pay-later (BNPL) schemes are now used by over two-thirds (70%) of Britons amid the cost-of-living crisis.
Expert Warning on Buy Now, Pay Later
George Abouzolof, Senior Mortgage Advisor at Clifton Private Finance, explained that while BNPL may appear attractive, it carries significant risks. 'Buy Now, Pay Later schemes may seem tempting when trying to secure a good deal, buy concert tickets, or purchase an expensive item. However, these transactions can appear on your credit report, which lenders will review during a mortgage application.'
'If you regularly rely on these schemes, lenders may see it as a red flag, as it could suggest you struggle to pay for everyday items upfront due to cash flow issues. This may signal that you could be a riskier borrower who might struggle to keep up with monthly mortgage repayments, making your application more likely to be rejected.'
Other Common Mistakes That Hurt Mortgage Chances
The warning comes as first-time buyers continue to grapple with soaring house prices and stricter affordability checks. Abouzolof highlighted several other errors that can lead lenders to turn down a mortgage application entirely.
Regular Gambling Activity
The expert cautioned: 'If you enjoy placing bets on horses or football scores, it's worth being cautious, whether you're betting online, in casinos, or in betting shops. Occasional gambling is unlikely to cause concern. However, frequent betting or gambling with larger sums of money may be viewed by lenders as risky or irresponsible spending behaviour, which could make them more cautious about approving your mortgage.'
Splashing Out on Expensive Items
'We all like to treat ourselves from time to time, but consistently spending large amounts on luxury items could make lenders more cautious about offering you a loan,' warned Abouzolof. 'If you can comfortably afford these purchases, lenders are unlikely to raise concerns. However, regularly splurging when you do not have the means to do so could raise worries about debt levels or your ability to keep up with monthly mortgage repayments.'
Recently Taking Out New Credit Cards
The expert noted that while credit cards can demonstrate responsible borrowing when used correctly, this is not always the case. 'How and when you use them can affect your eligibility for a mortgage. For example, taking out a new credit card shortly before applying for a mortgage could signal to lenders that you may not have enough income to cover your monthly outgoings. It can also negatively affect your credit score.' He advised: 'If you do have a credit card, it's important to show that you repay your balance each month and avoid opening new credit accounts close to a mortgage application where possible.'
Overdraft Use
Abouzolof warned: 'Consistently using your overdraft, or regularly dipping into an arranged overdraft, could affect your chances of getting a mortgage approved. It may signal to lenders that you rely on borrowed money to cover everyday expenses or that you are not closely monitoring your finances. This can make you appear to be a riskier borrower in the eyes of lenders.'
Leaving a Joint Bank Account Open After Separating
One of the most crucial steps following a separation is shutting down the joint account. You should also ensure no shared credit products remain open, Abouzolof explained. 'You can also file a notice of disassociation with credit reference agencies to formally remove the financial link. Leaving a joint account open can also raise questions during affordability checks if you later apply for credit or a mortgage, either on your own or with a new partner. There are also risks when it comes to debt. Even if one person causes the debt on a joint account, both account holders are legally responsible for covering overdrafts or unpaid fees, which can impact both of your credit scores.'
Credit Score Oversights
A further frequent error is failing to check your credit profile with sufficient notice, he cautioned. 'Your credit score directly affects the rates and products available to you. Simple errors, like outdated addresses or missed payments, can be fixed, but only if you catch them early.'
