More than half of prospective buyers wrongly believe existing debt would block their application
More than half of prospective first-time buyers incorrectly believe that having existing debt would automatically prevent them from obtaining a mortgage, according to new research published by Lloyds.
The survey of over 1,000 adults in Great Britain who planned to buy their first home within five years, conducted by Find Out Now on behalf of Lloyds Banking Group, found widespread misunderstanding of mortgage eligibility criteria.
Some 58% of respondents believed existing debt would automatically disqualify an applicant, while 54% cited being on a zero-hours contract and 37% believed a 20% deposit was required. Other misconceptions included being in an overdraft (40%), receiving benefits (38%), having recently changed jobs (31%), not having a perfect credit score (30%), and being self-employed (24%).
In reality, none of these factors would automatically prevent most lenders from offering a mortgage, subject to individual circumstances and standard affordability and eligibility assessments.
The research also found that more than a third (37%) of prospective buyers said fear of rejection was a specific concern, despite holding inaccurate beliefs about what lenders assess.
Over half (53%) said they had delayed or forgone significant life milestones — including travelling (28%), buying a car (15%), getting married (14%) and having children (14%) — while trying to save for a property. Nearly two-thirds (64%) had cut back on day-to-day spending, with holidays (46%), eating out (41%) and buying new clothes (39%) the most commonly cited areas.
The research highlighted how far many prospective buyers feel the goal of homeownership has receded. More than a quarter (27%) said learning a new language felt more achievable than buying their first home, while one in five said running a marathon or writing a book seemed easier. Some 9% said winning the television programme Gladiators would be more attainable.
"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," said Amanda Bryden (pictured right), head of mortgages at Lloyds. "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."
Lloyds has also partnered with television personality and first-time homeowner Livi Sheldon (pictured right), known for appearing on Gladiators, to draw attention to the misconceptions identified by the research.
"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," Sheldon said. "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."
Lloyds, one of the UK's largest mortgage lenders, offers a range of products aimed at buyers with smaller deposits, including a £5,000 deposit mortgage for properties worth up to £300,000, a 5% deposit mortgage, and a First Time Buyer Boost product allowing eligible applicants to borrow up to 5.5 times their annual household income with a 10% deposit or more.
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