Halifax Eases Mortgage Criteria for Self-Employed: 1-Year Accounts Accepted & Greater Flexibility for 2024/25

Halifax Updates Self-Employed Mortgage Criteria for 2024/25 Tax Year

Halifax, one of the UK’s leading mortgage lenders, has announced significant updates to its mortgage criteria for self-employed applicants, set to take effect as the 2024/25 tax year approaches. These changes are designed to enhance mortgage affordability and flexibility, benefiting both newly self-employed borrowers and established business owners. If you’re self-employed and planning to buy, remortgage, or invest in property, these updates could help you access more competitive mortgage products with less historical evidence of income.

Key Criteria Changes: 1-Year Accounts Now Considered

In a move that will be welcomed by many entrepreneurs, Halifax can now consider mortgage applications from newly self-employed clients with just one year’s worth of income evidence. This is particularly noteworthy for business owners who’ve struggled to meet traditional two- or three-year income evidence requirements. Here’s how the updated criteria work:

• 1 Year Accounts Accepted: Applicants can provide salary and dividends from 1 full trading year’s SA302/tax calculation.
• No Averaging Required: Halifax will no longer average income across two years for new self-employed applicants using this route.
• Industry Experience Considered: Track record in the same sector is desirable but not essential.
• Supporting Documentation: A projection letter from your accountant and three months’ business bank statements will be required.

Flexible Use of Net Profits After Tax

If using just salary and dividends doesn’t provide the desired affordability, Halifax also offers a case-by-case assessment using net profits after tax plus salary. This can increase the maximum mortgage amount available to some company directors and business owners.

• What you’ll need:
  • Two years’ finalised accounts showing rising turnover and net profit.
  • Applicant must be a majority shareholder (but this can be combined with other shareholders if necessary).
  • An accountant must confirm both the projection and how much could have been drawn without detriment to the business.
  • Three months’ business bank statements.

How to Present Self-Employed Income to Halifax

• Limited Companies: Provide the total of salary/remuneration plus dividends drawn.
• Partnerships: Indicate your share of net profit.
• LLPs: Include the total remuneration package (profit share and annual drawings).
• Sole Traders: Key in net profit as shown on tax calculations.

For those applying with just one year’s evidence, simply leave the previous year blank on Halifax’s system. Halifax confirms that averaging will not be applied with this approach.

For more detailed instructions, visit the Halifax Keying Hints and Tips page.

Company Structure Changes Allowed

If your business has changed its structure (for example, from sole trader to partnership, or from partnership to limited company), Halifax may still consider your application – provided you remain in the same line of business. This offers greater flexibility for evolving business owners and those who have restructured recently.

Who Benefits Most from These Updates?

• Newly self-employed individuals seeking to purchase or refinance without waiting multiple years.
• Company directors and majority shareholders requiring a more flexible assessment of actual income.
• Those planning or having recently restructured their business (e.g., from sole trader to limited company) in the same sector.

Why Apply with Halifax for Your Self-Employed Mortgage?

• Fast-tracked applications for those with just one trading year’s evidence.
• Flexible assessment options for varied business structures and shareholder setups.
• Industry-leading support for evolving business owners including business structure changes.
• Competitive mortgage product range for both residential and buy-to-let needs.

Your Next Step: Get Tailored Mortgage Advice

The updated Halifax criteria open new opportunities for self-employed borrowers and company directors across the UK. To find out if you qualify or to explore how these changes could boost your affordability, contact our specialist mortgage brokers today. We’ll help you navigate the latest lending criteria and secure the best possible rate for your situation.

Frequently Asked Questions (FAQs)

• Who qualifies for a Halifax self-employed mortgage with just one year’s accounts?
  You must have completed at least one full trading year with an SA302, provide accountant projections, and supply three months’ business bank statements.
• How do Halifax’s criteria changes affect my mortgage eligibility?
  If you’re newly self-employed, you can apply sooner and potentially borrow more thanks to the consideration of one year’s income or net profit assessment.
• Can I apply if I’ve recently changed my company structure?
  Yes – as long as your business remains in the same sector, company structure changes (sole trader, partnership, limited company) are acceptable.
• How can I find out if I qualify for a Halifax mortgage?
  Speak to one of our mortgage brokers for a free eligibility check and tailored advice based on your unique business situation.
• Is Halifax suitable for buy-to-let or remortgage for self-employed applicants?
  Yes, Halifax provides a wide range of competitive mortgages, including buy-to-let and remortgage deals for the self-employed.