Do you think bad credit means you can’t get a mortgage? Perhaps you are convinced that you need at least a 10% down payment to buy a house or perhaps you think that you can only get a mortgage through your current bank.
First-time buyers can even – in some cases – take out a mortgage with a down payment of only 5%. And sticking with your bank could mean missing out on some cheaper mortgage options.
As for having bad credit, while it will make it harder to get a mortgage, it’s certainly not the end of the road.
But these – and many other misconceptions around home buying and mortgages – could be putting millions of potential first-time buyers off the property ladder, the HomeOwners Alliance has suggested today.
It has revealed the findings of a survey of aspiring homeowners, which found that many may not be able to access their own home due to misconceptions or myths they have picked up.
The company now wants to set the record straight and debunk the myths that could keep many people from becoming homeowners.
Myth 1: If you have bad credit, you can’t get a mortgage
As many as 65% of respondents believed that poor credit was an immediate barrier. But while it is true, a bad credit score can make getting a mortgage more difficult, but your credit score isn’t the only thing lenders take into account. The HomeOwners Alliance recommends working with a real estate agent to help find the right lender.
Myth 2: You need at least a 10% down payment to buy a house
While almost two-thirds of aspiring first-time buyers (62%) believe that a minimum 10% down payment is required to take out a mortgage, there is in fact a growing availability of lower down payment and no down payment products.
Moneyfacts reports that the number of low deposit mortgages is at its highest level in almost 18 years, with 489 products with a Loan-to-Value (LTV) of 95% and 927 with a LTV of 90% to choose from in early 2026.
Having a larger down payment can improve access to better rates, but there is no set threshold for homeownership.
Myth 3: The maximum you can borrow is four to five times your income
Nearly half of aspiring homeowners think you can borrow the equivalent of four to five times your salary.
But over the past year, several major lenders have increased these income multiples in response to the regulator’s relaxation of rules.
Myth 4: The mortgage with the lowest interest rate is the cheapest overall
According to the HomeOwners Alliance, nearly half of prospective homeowners focused on interest rates when comparing mortgage deals. But, it explained, the total cost of a mortgage can vary significantly when closing costs and other costs are taken into account.
Additionally, some products with lower rates come with higher upfront costs, which can reduce or even offset the apparent savings.
Myth 5: It’s the best to take out a mortgage with your current bank
The research found that first-time homebuyers were more likely than the general public to assume that taking out a mortgage through their existing bank would be the best option (40% compared to 26% overall). But this could potentially limit their exposure to the full range of products available, experts say.
Myth 6: You can’t explore mortgage options until you find a home
Potential first-time buyers also report lower confidence in the mortgage process itself. A quarter (25%) believe they should secure a home before exploring mortgage options, compared to 16% of adults overall, the survey found.
But this misunderstanding can delay preparation and weaken their position when they are ready to make an offer. Speaking to an estate agent who can help you obtain a mortgage in principle or decision in principle, as it is also known, can put you in a much better position.
Paula Higgins, CEO of property website HomeOwners Alliance, said: “Too many first-time buyers put themselves out of business before even having a proper chat with mortgage experts about what could be possible.
“Misunderstandings about deposits, lending limits and how mortgages work undermine confidence from the very first hurdle.
“At the same time, some who do persevere may focus on the wrong things, such as interest rates or sticking with their existing bank, rather than looking at the total cost and the full range of options available. Getting clear, independent advice at an early stage 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 potential buyers find it difficult to know what is and isn’t possible. Major strides have been made in the last twelve months to tackle some of the biggest challenges first-time buyers face in saving for a deposit and being able to borrow enough money to afford high prices.
“That product and criteria innovation is helping to change what could be possible, so it’s worth seeking advice to cut through the dizzying array of options to better understand whether there are solutions that could put homeownership within reach.”