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<\/p>\nBritons with flawless credit histories are being turned away by major banks because of their use of buy now, pay later services, new research has claimed.<\/p>\n
A survey of 21 mortgage brokers found applicants with perfect credit scores face rejection when lenders discover transactions from platforms such as Klarna on their records.<\/p>\n
The study, which was conducted by the Association of Mortgage Intermediaries, highlights the growing impact of BNPL (Buy Now, Pay Later) usage on home loan applications.<\/p>\n
Despite meeting traditional lending criterias, many prospective homeowners are finding that their use of interest-free payment schemes has become a barrier to securing mortgages from high street lenders.<\/p>\n
The research revealed that 67 per cent of brokers have seen BNPL use contribute to or directly cause mortgage rejections. <\/p>\n
Of these, 40 per cent involved clients who used such services regularly, while 21 per cent said borrowers had used them habitually.<\/p>\n
One broker reported that a client was rejected by four major banks after using BNPL services several times, despite maintaining a perfect credit score. <\/p>\n
Another applicant was refused when a lender found 33 deferred Klarna payments over twelve months. In addition, 27 per cent of brokers said BNPL use led to clients being offered higher interest rates than expected.<\/p>\n
Some applicants presented credit files more than 150 pages long due to numerous Klarna transactions, complicating the review process for lenders.<\/p>\n
Major banks rejecting applicants with flawless credit over buy now pay later use<\/p>\n
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GETTY<\/p>\n
How Banks and building societies treat BNPL commitments during mortgage assessments<\/p>\n
Some major lenders disregard BNPL activity altogether. Nationwide only considers agreements lasting more than six months and reports few such cases.<\/p>\n
Yorkshire Building Society sees occasional BNPL use as unproblematic unless combined with other signs of financial stress.<\/p>\n
Meanwhile, Santander treats active BNPL balances as existing debt, which can reduce the maximum mortgage amount available.<\/p>\n
Leeds Building Society factors BNPL commitments into affordability checks to ensure applicants can still meet repayments when balances are due.<\/p>\n
NatWest classifies BNPL as committed expenditure in affordability assessments, while Coventry Building Society warns that regular use could affect first-time buyers already close to their borrowing limits.<\/p>\n
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Klarna argues completed purchases show good money management and can even enhance a mortgage application.<\/p>\n
A company spokesman said: “If a mortgage broker tells you that using Klarna means you won’t get a mortgage, find a different broker. Lenders have made clear they see healthy, short-term, interest-free BNPL use as a normal part of modern money management \u2013 and when used responsibly, it can help, not hinder, your chances of getting a mortgage.”<\/p>\n
Clearpay said it has received no customer concerns about mortgage impacts, describing BNPL as an “everyday payment” option for consumers seeking flexible financial tools. <\/p>\n
The company warned parts of the financial industry misunderstand BNPL\u2019s purpose and user behaviour.<\/p>\n
Both firms criticised lenders for being slow to adapt to new payment habits, with Clearpay noting 95 per cent of its transactions are settled on time.<\/p>\n
Mortgage advisers are now urging BNPL users to prepare carefully before applying for home loans.<\/p>\n
David Hollingworth, from L&C, advised reviewing credit reports with major agencies and resolving any negative entries quickly. <\/p>\n
He said clearing overdue payments and maintaining a clean history can significantly strengthen applications.<\/p>\n
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Banks and building societies often have differing approaches to Buy Now, Pay Later schemes<\/p>\n
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Mortgage adviser Jo Murgatroyd recommended closing dormant BNPL accounts and ensuring timely payments on active ones. <\/p>\n
She said borrowers should be fully transparent with brokers about any BNPL commitments.<\/p>\n
Experts also suggest reducing non-essential spending and avoiding new credit agreements before applying for a mortgage.<\/p>\n
They argue showing consistent, responsible credit management can improve outcomes with lenders, while minimising BNPL use helps applicants appear financially stable.<\/p>\n
A Klarna spokesperson told GB News that short-term, interest-free buy now, pay later (BNPL) products, such as its \u201cPay in 30\u201d and \u201cPay in 3\u201d options, typically involve small purchases and are unlikely to affect mortgage applications.<\/p>\n
\u201cThe average transaction value for these things is about \u00a3100,\u201d the spokesperson said. \u201cIf you split that into three, that\u2019s going to be \u00a333. As a one-off, most don\u2019t think a mortgage broker is going to take account of that, because it\u2019s just such small amounts of money.\u201d<\/p>\n
They added that such payments are usually cleared well before a mortgage begins: \u201cTypically, you will have paid off those loans fully by the time your mortgage starts.\u201d<\/p>\n
However, the spokesperson acknowledged that regular BNPL use could be factored into affordability checks: \u201cIf you\u2019re regularly spending \u00a3200 a month on buy now, pay later, then some brokers may take that into account in your monthly outgoings.\u201d<\/p>\n
They stressed that lenders treat BNPL spending like any other expense: \u201cIt\u2019s no different from just spending that money on your debit card. <\/p>\n
“From the perspective of the mortgage lender, they\u2019re just looking at it saying, well, you\u2019re spending \u00a3200 a month, so that\u2019s part of your monthly expenses.\u201d<\/p>\n
The spokesperson concluded: \u201cAs long as you keep up repayments, then it’s treated no differently to a debit card payment\u2014 that\u2019s the view we understand lenders take.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Britons with flawless credit histories are being turned away by major banks because of their use of buy…\n","protected":false},"author":2,"featured_media":254929,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,2222,1891,53672,16819,12727,56,54,55,106044],"class_list":["post-254928","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-money","tag-mortgage","tag-nationwide-building-society","tag-natwest","tag-santander","tag-uk","tag-united-kingdom","tag-unitedkingdom","tag-yorkshire-building-society"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/254928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=254928"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/254928\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/254929"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=254928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=254928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=254928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}