Millions of would-be first time buyers are being held back by widespread confusion about mortgages, according to new research from the HomeOwners Alliance.
Key findings among aspiring homeowners:
- 65% believe having bad credit means you cannot get a mortgage
- 62% think you need at least a 10% deposit to buy a home
- 49% believe the maximum they can borrow is limited to 4 to 5 times their income
- 47% believe the lowest interest rate automatically means the cheapest mortgage overall
- 40% believe it is best to get a mortgage with their current bank
- 25% think you cannot explore mortgage options until you have found a property
The findings suggest many would-be buyers are ruling out getting on the property ladder because of assumptions about the mortgage process that may not reflect how the market operates today.
While a bad credit score can make getting a mortgage more difficult, 65% of people wrongly think it means you’ll always be turned down. Your credit score isn’t the only thing lenders consider. This is where working with a broker can help find the right lender for you.
Confusion is almost equally pronounced around deposits. Nearly two thirds of aspiring first time buyers (62%) believe a minimum 10% deposit is required, despite the growing availability of lower deposit and no deposit products. Moneyfacts reports the number of low-deposit mortgage deals is at its highest level for almost 18 years, with 489 products at 95% loan-to-value (LTV) and 927 at 90% LTV to choose from at the start of 2026. While a larger deposit can improve access to better rates, the idea there is a fixed threshold is reinforcing the idea that home ownership is further out of reach for people than it is in reality.
And despite several major lenders increasing income multiples beyond the long standing 4 to 5 times salary benchmark, almost half of aspiring homeowners (49%) still believe that is the maximum they can borrow. This suggests many potential buyers may be underestimating their borrowing capacity before they even get mortgage advice.
And nearly half of aspiring homeowners (47%) focus primarily on headline interest rates when comparing mortgage deals. This is despite the fact the overall cost of a mortgage can vary significantly once arrangement fees and other charges are taken into account. Some products with lower rates carry higher upfront fees, which can reduce or even outweigh the apparent saving.
In addition, first time buyers are more likely than the wider public to assume their best option is to arrange a mortgage through their existing bank (40% compared with 26% overall), potentially limiting their exposure to the full range of products available.
Prospective first time buyers also report lower levels of confidence about the mortgage process itself. A quarter (25%) believe they must secure a property before exploring mortgage options, compared with 16% of adults overall. This misunderstanding could delay preparation and weaken their position when they are ready to make an offer.
Paula Higgins, Chief Executive of the property website HomeOwners Alliance, said:
“Too many first time buyers are putting themselves out of the running before they have even had a proper conversation with mortgage experts about what might be possible. Misunderstandings about deposits, borrowing limits and how mortgages work are denting confidence at the very first hurdle.
“At the same time, some who do press ahead may be focusing on the wrong things, such as headline rates or sticking with their existing bank, rather than looking at the overall cost and the full range of options available. Getting clear, independent advice early on can make a real difference. ”
David Hollingworth, Associate Director at L&C Mortgages said:
“The mortgage market changes quickly and often, so it’s understandable that many would-be buyers can find it hard to know what is and isn’t possible. There’s been great strides made in the last 12 months to address some of the biggest challenges that first time buyers face in saving for a deposit and being able to borrow enough to meet high prices.
"That product and criteria innovation is helping to change what could be possible. It’s therefore worth seeking advice to cut through the dizzying array of options to better understand if there are solutions that could put home ownership within reach."
