Changes to HSBC Self-Employed Criteria

HSBC have announced that from today they will be making some big changes to their self-employed criteria. Seemingly jumping on the band wagon and following in similar footsteps as Santander last week.

What are the changes to HSBC self-employed criteria?

Like many lenders, HSBC tightened the purse strings on their lending at the start of the coronavirus pandemic in 2020 as job stability was uncertain and nobody knew what economic impact lockdowns would have. HSBC restricted lending on self-employed people and increased requirements across the board in order to ensure their safety in case the economy completely collapsed. However, they have announced in a message to mortgage brokers today that they are rolling back some of these rules and will introduce some new criteria. Their official statement of changes is:

• When submitting an application, we will deduct any Bounce Back Loans (BBL) or Coronavirus Business Interruption Loan Scheme (CBILS) repayments from the net profits. Please be aware, that if this is not already accounted for in the accounts or you’ve not deducted the amount from the net profit in the application, this may result in a counter offer being made by the underwriter.

We recently reduced our packaging requirements for self-employed residential mortgage applications to return to our pre-covid position.

The following documents will be required to support your customer’s self-employed mortgage application:

Sole Trader, General Partnership or Limited Liability Partnerships with fewer than 200 partners

• The last 2 years’ worth of Tax Year Overviews and Tax Calculations – the most recent year must be dated within the last 18 months.

Limited Company Director with 25% or more shareholding

• The last 2 years’ finalised accounts – the most recent year must be dated within the last 18 months (Where the latest year’s finalised accounts are dated on or before 31st March 2021, the last 3 months’ business bank statements will be required).
• If there is more than 1 director, we will also require the last 2 years’ P60s or the last two years SA302 / tax calculations, and the corresponding tax year overviews to evidence salaried income.

Limited Liability Partnerships with 200 or more partners

• Letter issued by either the company finance director or accountant (the letter must detail the customer’s earnings over the past 2 years and be dated within the last 3 months)

As with Santander’s announcement last week, this is a very positive step in the right direction for HSBC and proof that lenders are finally feeling safe enough to start heading towards pre-covid lending and are regaining their trust in their clients.

If you or someone else you know is self-employed and wants to discuss a new mortgage with a professional, please feel free to give us a call today. We are here to help.