"Mortgages can be complicated and daunting, and it’s completely understandable that many aspirational homebuyers may be put off from enquiring and don’t realise that they could already be in a position to buy"
- Stephanie Daley - Alexander Hall
Research from mortgage broker Alexander Hall suggests many aspiring buyers are holding back from applying for mortgages due to common misconceptions about affordability, deposits, and eligibility.
The survey of would-be buyers who have not yet enquired about a mortgage found that many could already be in a position to purchase, but misconceptions are preventing them from taking the next step.
The main barrier cited was a belief that their deposit was not sufficient. Other reasons included fear of rejection, doubts over income levels, concerns about repayments, and reluctance to share financial history. Some respondents also cited self-employment, current property ownership, or adverse credit as obstacles.
Alexander Hall noted that a combination of outdated perceptions and personal apprehension is discouraging potential buyers. Market changes such as the relaxation of loan-to-income multiples and the wider availability of low deposit products mean that many of these barriers may no longer apply.
The firm identified six of the most common myths.
1: You need a large deposit to get a mortgage. While many respondents believed a 10% deposit was required, UK minimum deposits typically start at 5%, with some lenders offering zero or 1% deposit products. Larger deposits may lower interest rates, but options for buyers with smaller deposits are increasing.
2: You need to provide months of bank statements. Most lenders request as little as one month of bank statements, even for complex cases. However, 57% of those surveyed answered incorrectly or were unsure about this requirement.
3: Self-employed buyers need three years of accounts. Many respondents believed this to be the case, yet lenders usually request two years of accounts, with some accepting just one. Income assessment can also vary, with contractors sometimes assessed on annualised day rates and directors on salary plus dividends or net profits.
4: Loan-to-income multiples are heavily restricted. A third of respondents thought they could only borrow up to three times their income, while 22% were unsure. Most lenders now offer 4.75–5x multiples, with some high street lenders extending this to 5.5x for first-time buyers. Specialist lenders, such as April Mortgages, may go as high as 7x for certain applicants. Alexander Hall data shows first-time buyers are currently borrowing an average multiple of 4.08 times income, compared to 3.86 last year.
5: Owning a property prevents you from buying with a partner. Almost half of the respondents thought this was not possible. Joint applications can improve borrowing capacity by combining incomes, and specialist structures, such as joint borrower sole proprietor arrangements, can support tax planning.
6: Poor credit history prevents approval. Just 36% of respondents knew that specialist lenders may accept applicants with adverse credit. While serious issues like CCJs, defaults, or bankruptcy can affect eligibility, larger deposits and accurate credit reporting can still allow applications to proceed.
“Mortgages can be complicated and daunting, and it’s completely understandable that many aspirational homebuyers may be put off from enquiring and don’t realise that they could already be in a position to buy,” said Stephanie Daley, director of partnerships at Alexander Hall. “This is largely down to the fact that a number of mortgage market myths exist, but we’ve seen notable improvements across the mortgage landscape of late that are helping to put many of these myths to bed.
“The relaxation of loan to income multiples and greater availability of low deposit mortgage products, in particular, are helping to vastly improve the chances of getting a mortgage, even for first-time buyers or those who may have previously felt their financial position was a barrier. The best place to start is with a great mortgage adviser. They can offer professional, impartial advice to help ascertain your potential position within the market and act as a link between you and multiple lenders so that you have a guiding hand and the process doesn’t feel so overwhelming.”
