Third of first-time buyers worry about being rejected for a mortgage

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.

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.

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.”

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%