More than half of prospective first-time buyers (FTBs) believe existing debt would automatically prevent them from getting a mortgage, according to new research from Lloyds.

The bank's survey identified widespread misconceptions about eligibility that could be causing aspiring homeowners to rule themselves out before applying.

Of 1,051 prospective FTBs, 58% wrongly believed existing debt would automatically lead to a mortgage rejection, while 37% thought a 20% deposit was essential.

Other common misconceptions included believing that using an overdraft (40%), receiving benefits (38%), recently changing jobs (31%), having an imperfect credit score (30%) or being self-employed (24%) would automatically prevent them from getting a mortgage.

More than a third (37%) said being rejected for a mortgage was a particular concern, while 53% had delayed or given up major life milestones while trying to buy their first home. This included travelling (28%), buying a car (15%), getting married (14%) and having children (14%).

The research also found that 64% had cut back on everyday spending to save for a home, with holidays, eating out and new clothes among the most common sacrifices. More than a quarter (27%) said learning a new language seemed more achievable than buying their first home, while 9% said even winning Gladiators would be easier.

In reality, lenders assess applications based on factors including income, outgoings and overall affordability, suggesting that existing borrowing, self-employment or a less-than-perfect credit record do not automatically prevent someone from securing a mortgage, Lloyds said.

Amanda Bryden, head of mortgages at Lloyds, said: "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. Many people are surprised to find they're in a stronger position than they expected."

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