Many aspiring homeowners could be delaying their plans to get on the property ladder because they mistakenly believe they wouldn’t qualify for a mortgage, new research from Lloyds suggests.

The study of more than 1,000 prospective first-time buyers found widespread confusion about what could prevent someone from getting a mortgage. More than half (58%) incorrectly believe having existing debt would automatically stop someone being approved, while over a third (37%) think a 20% deposit is essential.

Many also believe factors such as using an overdraft (40%), receiving benefits (38%), changing jobs recently (31%), not having a perfect credit score (30%) or being self-employed (24%) would definitely put homeownership out of reach.

The findings suggest that while affordability is one of the biggest challenges facing first-time buyers, misconceptions about mortgage eligibility may be creating an additional barrier, with some ruling themselves out before they’ve even explored their options.

Lloyds has partnered with Gladiator, television personality and first-time homeowner Livi Sheldon to highlight some of the common misconceptions that may be discouraging would-be buyers from exploring their homeownership options.

What factors do would-be first-time buyers think would stop someone getting a mortgage?

Factor

Proportion

Existing debt

58%

Being on a zero-hours contract

54%

Being in an overdraft

40%

Receiving benefits

38%

Not having a 20% deposit

37%

Having changed jobs recently

31%

Not having a perfect credit score

30%

Earning less than £50,000 a year

27%

Being self-employed

24%

Using Buy Now Pay Later

21%

Being on maternity or paternity leave

20%

Having student loan debt

13%

In reality, none of these factors would automatically prevent most lenders from being able to offer a mortgage, subject to individual circumstances and standard affordability and eligibility assessments.

Mortgage providers typically consider a range of factors, including income, outgoings and overall affordability, rather than relying on one aspect of a person’s finances.

Myths versus reality

Some of the most common first-time buying misconceptions identified by the research include:

Myth: You need to be debt free to get a mortgage

Reality: Existing borrowing, such as student loans, credit cards, car finance or overdrafts, does not automatically prevent someone from getting a mortgage. Lenders look at whether repayments are affordable alongside other financial commitments.

Myth: You need a 20% deposit

Reality: Some mortgage products are available with significantly smaller deposits than many people realise – such as Lloyds’ new £5k deposit offer – meaning buyers may be able to purchase a home sooner than they think.

Myth: You need a perfect credit score

Reality: There is no single credit score required to get a mortgage. Lenders take a range of factors into account when assessing applications.

Myth: Self-employed people can’t get a mortgage

Reality: Many lenders offer mortgages to self-employed applicants, though they may need to provide additional evidence of their income.

Are first-time buyers putting their ambitions on hold?

The research suggests many prospective first-time buyers may be putting their ambitions on hold unnecessarily.

More than a third (37%) said being rejected for a mortgage was a particular concern, despite widespread misconceptions about what could prevent someone from getting approved.

These findings come at a time when many aspiring homeowners are already making significant financial and personal sacrifices to save for their first property.

More than half (53%) said they had delayed or given up important life milestones while trying to get on the property ladder, including travelling (28%), buying a car (15%), getting married (14%) and having children (14%).

Almost two-thirds (64%) said they had cut back on day-to-day spending while saving for a home, with holidays (46%), eating out (41%) and buying new clothes (39%) among the most common sacrifices.

Amanda Bryden, Head of Mortgages at Lloyds, said:

“Buying your first home can feel overwhelming, especially when you’re trying to save for a deposit while balancing everyday costs and other life goals.

“Our research shows many aspiring first-time buyers believe they need to be debt free, have a perfect credit record or save a 20% deposit before they can even think about getting a mortgage.

“In reality, mortgage decisions are based on a much broader picture of your finances and circumstances. While affordability is important, don’t rule yourself out because of misconceptions about what lenders look for.

“This isn’t something people need to navigate on their own. Speaking to a mortgage adviser or broker early on can help you understand what options are available. Many people are surprised to find they’re in a stronger position than they expected.”

Livi Sheldon, Gladiator, television personality and first-time homeowner, said:

“Buying my first home was an incredible milestone, but I know how easy it is to look at the challenges involved and wonder whether it’s achievable.

“A lot of people assume they need everything to be perfect before they can even think about getting a mortgage, but that’s not necessarily the case. Talking to experts and understanding your options can make a huge difference.

“Getting on the property ladder isn’t easy, especially when you’re working hard to save, cutting back on things you enjoy and putting other plans on hold. But it’s important not to rule yourself out before you’ve explored what’s possible.”