Widespread confusion about mortgages is preventing millions of aspiring homeowners from entering the property market according to new research from the HomeOwners Alliance.
The study found many potential first-time buyers are ruling themselves out of home ownership because of misconceptions about deposits, borrowing limits and how mortgage products work.
Among those hoping to buy their first home, 65% believe having bad credit means they cannot get a mortgage, while 62% think a minimum 10% deposit is required to purchase a property.
Almost half (49%) believe the maximum they can borrow is limited to four or five times their income, despite some lenders now offering higher income multiples.
LOAN CONFUSION
The research also suggests confusion about how mortgage deals are structured. Nearly half of aspiring homeowners (47%) believe the lowest interest rate automatically means the cheapest mortgage overall, even though the true cost of borrowing can vary depending on arrangement fees and other charges.
Other common assumptions include 40% believing the best option is to arrange a mortgage through their existing bank, and 25% thinking they cannot explore mortgage options until they have found a property.
The HomeOwners Alliance says these misunderstandings risk deterring potential buyers at a time when the mortgage market is evolving to support lower deposits.
Data from Moneyfacts shows the number of low-deposit mortgage deals is at its highest level for almost 18 years. At the start of 2026 there were 489 products available at 95% loan-to-value (LTV) and 927 at 90% LTV.
INDEPENDENT ADVICE
Paula Higgins (main picture, inset), Chief Executive of HomeOwners Alliance, says: “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.”
FIRST-TIME BUYER CHALLENGE
David Hollingworth, Associate Director at L&C Mortgages, adds: “The mortgage market changes quickly and often, so it’s understandable that many would-be buyers can find it hard to know what is and isn’t possible.
“There’s been great strides made in the last 12 months to address some of the biggest challenges that first-time buyers face in saving for a deposit and being able to borrow enough to meet high prices.
“That product and criteria innovation is helping to change what could be possible.”
