Historically, getting a Halifax mortgage has always been a pretty safe option. One of the main players in the UK mortgage market, Halifax has always offered high loan to value, competitively priced, and low fee mortgage products. Even in times of economic struggle, Halifax has been a dependable lender. Their mortgage underwriters and their sensible approach to lending and borrowers is something to be commended. A recent update on their mortgage affordability for self-employed persons has only cemented this image of Halifax as a lender with borrowers best interests at heart.
What Are The Changes To Self-Employed Halifax Mortgage Criteria?
Halifax have always been good with non-standard PAYE income such as contractor mortgages, locum professionals, and the self-employed. Currently Halifax’s standard criteria for self-employed applicants is 2-years worth of income documents (SA302’s/Tax Overviews/Calculations/Accounts) however, their criteria does say that in some circumstances, 1-years self-employed history can be considered which is a lot more lenient than most lenders who will need 2 or even 3-years history.
Always wanting to improve the customer journey and help out as many borrowers as they sensibly can, Halifax have announced in a recent quick criteria update, that they will be making the following allowances to self-employed people applying for a mortgage:
For applications where there is an element of self-employed (Not necessarily all self-employed) income, and the total is more than £75,000, the loan to income cap has risen to 5.5X income from the standard 4.49X income used by most other lenders. That means that if your total application income is £80,000 (including an element of self-employed income) you could potentially get up to a £440,000 Halifax mortgage, compared to the standard £359,200. This change to criteria is available on mortgages up to 75% LTV. I.e. 25% deposit minimum.
For mortgage borrowing between £500,000 and £750,000 from 85 to 95% LTV, as well as loans between £750,000 and £1m from 75 to 85% LTV, a loan to income cap of 4X income will apply. For other self-employed cases with a total income of less than £75,000, the standard loan to income of 4.49X income will remain. Borrowers with an income of less than £40,000 borrowing up to 95% LTV will be subject to the standard 4.49X income also.
Those with total incomes between £40,000 and £50,000 will be able to borrow up to 4.75X income up to 85% LTV, and 4.49X income between 85 and 95% LTV. Borrowers earning between £50,000 and £75,000 up to 75% LTV can potentially access loans up to 5X their income.
A loan to income cap of 5.5X income is available to borrowers earning between £75,000 and £125,000 up to 75% LTV, as well as borrowers earning more than £125,000 up to 85% LTV.
What Does All This Mean For Self-Employed Mortgages?
Well, essentially Halifax are making it easier for self-employed people to borrow more. Halifax are still encouraging higher deposits and lower LTVs by giving the higher loan to income multiples to borrowers at 75% LTV. However, allowing people to borrow between 4.49X and 5.5X income in general is a really good move from Halifax. Especially for people who may have struggled in their self-employment slightly over the last 2.5 years. We are definitely supportive in Halifax’s choice with this and it only makes us love them even more.
If you or anyone else you know is self-employed and looking to get more mortgage for your money? Give our friendly and experienced mortgage team a call today to see how we can help you with your next mortgage.