Many first-time buyers may be delaying home ownership because they misunderstand the deposit needed to secure a mortgage, according to research from Mortgage Advice Bureau (MAB).

The broker firm said its findings pointed to a “deposit myth” among aspiring homeowners, with low-deposit and alternative mortgage options still poorly understood.

The research found that 73% of respondents were unaware of 95% loan-to-value mortgages, which require a 5% deposit, while 80% were unaware of track record mortgages, which can help renters use a history of keeping up with rental payments to support an application.

It also found that 70% were unaware of the full range of family-assisted mortgage options.

MAB said the findings suggested some prospective buyers may be ruling themselves out of a purchase before understanding the options available to them.

More than a quarter, 27%, said the deposit was the biggest dealbreaker when buying a home, while 39% believed a deposit of 10% or more was required. Only 50% correctly identified 5% as the typical minimum deposit.

FAMILY SUPPORT OPTIONS OVERLOOKED

The research also suggested that family-assisted routes to ownership remain underused.

More than half, 52%, said they would consider a parent or family member boosting their borrowing power, but 29% did not realise this was an option.

MAB said this indicated that some aspiring buyers may assume family support has to come in the form of a cash deposit, rather than through wider mortgage structures.

The study also found wider uncertainty around the buying process, with 31% saying they did not know how to get started.

Rachel Geddes, strategic lender relationship director at Mortgage Advice Bureau, said: “For many aspiring homeowners, the biggest barrier isn’t always the reality of the deposit required – it’s what they believe that number needs to be.

“What this research shows is that a large proportion of buyers are making decisions based on assumptions, particularly around how much they need to save before they can even consider buying.

“With a wide range of low-deposit and alternative mortgage options now available, understanding the different routes to homeownership is crucial. Speaking to an expert mortgage adviser can help prospective buyers cut through the noise, understand what’s actually required, and take the next step with confidence.”

LOWER DEPOSIT SOLUTIONS

David Morris, head of homes at Santander UK, added: “With so many misconceptions about what it takes to buy a home, many first-time buyers could be missing out on their chance to get on the housing ladder by not talking to an expert.

“Brokers are specialists in helping their clients see beyond the widely reported affordability struggles, instead looking at their individual circumstances to see what’s possible and using their knowledge to find the most appropriate options in the market.

“With many lower deposit mortgage solutions coming to the market, many first-time buyers could find that they’re closer than they think to get the mortgage they want and to being able make their homeownership dreams a reality.”