Halifax, one of the UK’s big six mortgage providers, has announced a significant change in its self-employed mortgage criteria, which will come into effect from tomorrow (Tuesday the 17th of October 2023). The new criteria will make significant changes to affordability for self-employed individuals, reflecting the bank’s commitment to responsible lending while addressing the needs of its customers and brokers alike. In this blog we will go through the Halifax self-employed mortgage criteria changes and what this means for prospective new borrowers.
Halifax Self-Employed Mortgage Criteria Income Calculation Adjustment
The first change announced by Halifax will come into effect tomorrow. Halifax will make a pivotal change to the way it calculates income for self-employed mortgage applicants. The new criteria will consider the latest year’s income or the average of the last two years, whichever is lower. This adjustment applies to self-employed applicants with an income of up to £50,000 in the ‘previous year’ for applications initiated after the date.
For applications that were already in progress of a mortgage application, including those with a Decision In Principle (DIP) that was carried out before the 17th of October, the income calculation method will remain unchanged, considering the lower of the last two years’ income.
Tax Year Requirements
Additionally, Halifax now requires the latest Tax Calculations and Tax Year Overviews for all new applications to be for the tax year 2022/2023. This ensures that the most recent financial data is taken into account when assessing self-employed mortgage applications, aligning with their commitment to responsible lending practices.
Halifax has made it clear that there are no other changes to the self-employed income criteria or verification processes. The core of the application process remains consistent with previous standards, apart from the income calculation method and the required tax documentation for new applications. To learn more about Halifax self-employed income requirements for mortgages, you can call our team of brokers today and we will happily guide you through everything you need to know.
Support for New Businesses
In a move aimed at supporting budding entrepreneurs, Halifax will consider applications from businesses that have been trading for one full year but less than two years. This provides an opportunity for recently established businesses and self-employed individuals to access Halifax’s mortgage products.
These changes indicate Halifax’s commitment to adapting and evolving with the market while ensuring their customers have access to competitive mortgage products. It not only simplifies the income assessment process for self-employed individuals but also opens doors for new businesses and entrepreneurs who may not meet the traditional two-year trading history requirement.
Speak To A Specialist Self-Employed Mortgage Advisor
By considering the latest year’s income or the average of the last two years, Halifax is aligning itself with the current needs of the market and ensuring responsible lending practices for all of its potential clients. This adjustment is something that always needs to be carefully considered at mortgage application stage with the help of a qualified mortgage broker. If you are self-employed and looking at getting a mortgage, please give our team a call today to see how we can help.
