More than half of prospective buyers wrongly believe existing debt would block their mortgage application
Misconceptions about mortgage eligibility are stopping first-time buyers from even picking up the phone, and a broker on the ground says the reality is considerably more flexible than most applicants assume.
Research published by Lloyds, based on a survey of over 1,000 adults in Great Britain who planned to buy their first home within five years, found that 58% of respondents believed existing debt would automatically disqualify them from obtaining a mortgage. A further 54% cited being on a zero-hours contract, 40% said being in an overdraft would block their application, and 37% believed a 20% deposit was the minimum requirement.
Paul Hampton (pictured top), owner and mortgage consultant at Approved Mortgage Solutions in Sunderland, told Mortgage Introducer the concern around existing debt is understandable but the reality is more nuanced. "They're right in that respect," he said. "But they can still maybe borrow £180,000, £170,000. There are lenders that'll do five- and six-times income on the right products." He added that framing matters too: "I think it's automatically disqualifying them from the mortgage they want, not what they can afford."
What the survey found
The research 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%), getting married (14%) and having children (14%) – while trying to save for a property.
Other common misconceptions included 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.
Hampton pointed out that zero-hours contracts and overdrafts – two of the most commonly cited concerns – are often more manageable than applicants assume. Zero-hours contract workers may find lenders willing to consider their application, while an overdraft "can be quite simply remedied by putting £1,000 of your savings into your current account," he said. For brokers already using education-led strategies to engage earlier-stage first-time buyers, these are familiar conversations.
Deposit options are wider than buyers realise
Deposit access has also shifted considerably in recent years, yet awareness of the options available remains low. Approved Mortgage Solutions handles a significant volume of cases where landlords sell to sitting tenants, a route that can effectively remove the deposit barrier entirely.
"As a landlord to a certain tenant, you can gift a 5% equity," Hampton said. "All you need is enough to cover your legal costs. If your landlord will give you a 5% or 10% concession, that acts as your deposit." He noted that clients often meet the news with scepticism. "Quite often they'll think, oh, is this a scam? Is it a scheme? Am I ticking the wrong box? But it's quite simple. It's like a gifted deposit, but it's from your landlord to you rather than from a family member to you."
Family support schemes are similarly misunderstood. Hampton said many parents would willingly assist if they understood the mechanics. "A lot of parents would be happy to put £20,000 into a savings account and not gift it, because if they gift it, they're never going to get it back, but it comes down to education" he said. The range of routes now available has increased as brokers look to help get first-time buyers on to the property ladder earlier.
Why speaking to a broker early makes the difference
For buyers who are not yet in a position to purchase, Hampton said the most useful thing a broker can do is help them build towards it systematically. "If you know that your mortgage and all of your bills is going to be £1,000, save that £1,000," he said. "Your deposit's going to appear quicker. You'll know what kind of lifestyle you're going to be living once you've moved into the house."
As analysis of how the housing ladder is shifting in 2026 shows, lender innovation and affordability trends are gradually improving conditions for first-time buyers, but Hampton's view is that the bigger obstacle remains the reluctance to seek advice in the first place.
His message is to engage a broker long before feeling ready, and to find one who takes a forward-looking view. "I'd quite happily speak to a first-time buyer now who's not looking to buy a house for another two years, because they're going to be so much better prepared when the time comes."
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