More than half believe debt scuppers home-owning ambitions
More than half (58%) of would-be first-time buyers believe that existing debt would prevent them from being approved for a mortgage, while more than a third (37%) believe that they must find a 20% deposit.
The survey of more than 1,000 prospective UK first-time buyers by Lloyds Banking Group found that more than a third (37%) said being rejected for a mortgage was a particular concern.
Other worries they believed put home ownership out of their reach included using an overdraft (40%), receiving benefits (38%), changing jobs recently (31%), not having a perfect credit score (30%) or being self-employed (24%).
Yet lenders will lend against all such circumstances in most occasions.
Added stress as would-be buyers cut back
The added stress of such misconceptions around lending is adding to the pressure already felt by would-be first-time buyers as they prepare for home ownership, the survey found.
More than half (53%) of those surveyed had delayed or given up major life milestones to achieve their buying ambitions, including travelling (28%), buying a car (15%), getting married (14%) and having children (14%).
Budgeting was a priority for many, with nearly two-thirds (64%) saying they had cut back on day-to-day spending while saving for a home. Holidays (46%), eating out (41%) and buying new clothes (39%) were 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.”
Factors 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% |
