A multitude of mortgage myths  

Millions of would-be first-time buyers are being held back by widespread confusion about mortgages, according to new research from the HomeOwners Alliance.

And the organisation is now keen to debunk some of the myths to give potential buyers a clearer picture of their options.

The research showed that among aspiring homeowners:

*65 per cent believe having bad credit means you cannot get a mortgage

*62 per cent think you need at least a 10 per cent deposit to buy a home

*49 per cent believe the maximum they can borrow is limited to four to five times their income

*47 per cent believe the lowest interest rate automatically means the cheapest mortgage overall

*40 per cent believe it is best to get a mortgage with their current bank

*25 per cent think you cannot explore mortgage options until you have found a property

The survey suggests 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 per cent 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 per cent) believe a minimum 10 per cent 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 per cent loan-to-value (LTV) and 927 at 90 per cent 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 four to five times salary benchmark, almost half of aspiring homeowners (49 per cent) still believe that is the maximum they can borrow.

This suggests many potential buyers, including those wishing to carry out renovation or remodelling work, may be underestimating their borrowing capacity before they even get mortgage advice.

And nearly half of aspiring homeowners (47 per cent) 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 per cent compared with 26 per cent 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 per cent) believe they must secure a property before exploring mortgage options, compared with 16 per cent of adults overall.

This misunderstanding could delay preparation and weaken their position when they are ready to make an offer.

It’s best to have a mortgage agreement in principle – which you can obtain in just 15 minutes – in your back pocket before you start viewing properties.

Paula Higgins, chief executive of the 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.”