Halifax 1 Year Self Employed Mortgage Guide 2025: Latest Criteria & Requirements

Getting a mortgage whilst self-employed can be challenging, especially for those with a new business, whether a or a limited company. However, with the right advice and support, it is possible to secure a Halifax mortgage for self-employed individuals.

As of 17 October 2023, Halifax updated its affordability assessment for self-employed applicants earning up to £50,000. The lender now uses the lower of either the latest year’s income or the average of the last two years to calculate borrowing capacity. Applicants must provide 2022/2023 tax calculations and tax year overviews, and Halifax has also expanded eligibility to include those with just one year of trading history, offering greater flexibility for newer businesses.

Quiz on Self-Employed Mortgages

Contractors vs General Self-Employed: Key Differences

Contractor-Specific Criteria (Halifax): Halifax requires a current contract for income verification and may annualise day ratesbased on a 46-week model. Under IR35 rules, contractors can be treated as employed—particularly IT contractors or those earning £500/day or £75 K/year—resulting in a different income assessment. These criteria are confirmed in Halifax’s official policy updates. Salary-plus-dividend assessments in limited companies and professional indemnity insurance requirements are not explicitly stated by Halifax.

General Self‑Employed Criteria: Halifax typically requires full-year trading accounts or SA302s, and may ask for evidence of ongoing business or contracts. However, there’s no clear indication that they adjust for seasonal income fluctuations, nor directly differentiate by business structure beyond documentation norms.

We would suggest you contact a specialist mortgage broker as soon as possible to sort this all out.

Understanding the Challenges

Self-employed individuals often face more stringent requirements when applying for a mortgage. This is due to the variable nature of their income and the need for more detailed proof of earnings. Typically, you need to provide tax calculations (SA302s) and a tax year overview. Some lenders may also require certified accounts or company accounts.

The Role of a Mortgage Broker

As a specialist mortgage broker, our goal is to help you secure the best mortgage deal tailored to your circumstances. Here is how we assist self-employed clients:

• Initial Consultation: We conduct an in-depth phone consultation to understand your requirements and the type of mortgage you are seeking. We discuss details such as annual income, tax returns, mortgage payments, credit history, and household bills.
• Lender Inquiries: We contact lenders using the provided information to secure an agreement in principle for you. This includes first-time buyer, home mover, or remortgage applications.
• Documentation: Once an agreement is reached, we send a detailed email outlining the repayment basis, maximum loan, monthly repayments, and early repayment charge. We also provide a list of required documents, including ID, tax year overview, tax calculations, and business bank statements.

Securing a Halifax Mortgage for Self-Employed

Our main objective is to place your case with a lender offering competitive high-street rates. We frequently secure approvals with specialist lenders for clients with only one year of accounts. To determine your self-employed income accurately, we may request an overview of your tax year and tax calculation from you or your accountant.

Credit Considerations

Credit issues can impact the approval of a Halifax 1-year self-employed mortgage. It’s essential to maintain a good credit score to improve your chances of securing a mortgage with mainstream lenders. Defaults, CCJs, and late or missed credit commitments can hinder your application.

Why Use a Broker?

A broker has access to many specialist lenders, some of which are not available to the public directly. They can:

• Research and Recommend: Identify suitable solutions for self-employed mortgage applicants.
• Calculate Income: Understand how to calculate income from tax returns, tax year overviews, and tax calculations, which can include net profit, rental income, dividends, and salary.

Application Packaging: Experienced brokers can effectively package a Halifax 1-year self-employed mortgage application, including writing a covering letter to explain the strengths of the case and justify acceptance based on 12 months of self-employed income.

Factors Considered by Halifax Underwriters

Halifax underwriters consider several factors when evaluating self-employed mortgage applications:

• Income History: Detailing previous income before becoming self-employed can significantly impact the approval process.
• Consistency: Continuing to work in the same industry or job role is crucial. Significant income jumps can be problematic.

Types of Self-Employed Mortgages

In addition to traditional self-employed mortgages, Halifax offers specialized mortgages for:

• Contractor Mortgage Applications: Applicants with a limited company or sole trader status and a certain amount of experience in the same line of work.
• CIS Contractors: Construction Industry Scheme workers with two years of history in the same role and 13 weekly voucher slips or three months of CIS slips.
• Umbrella Company Workers: Self-employed individuals with a history in the same line of work can apply quickly, often without the 1-year requirement.

1-Year Self-Employed Mortgage Comparison

Other Factors to Consider

• Deposit: Larger deposits and lower loan-to-value (LTV) ratios improve approval chances.
• SEIS Grants: Businesses that used the Self-Employed Income Support Scheme (SEIS) grants during the Coronavirus pandemic may face scrutiny.
• Bounce Back Loans: Applications involving bounce back loans will be examined more closely.
• Upcoming Contracts: Providing future or upcoming contracts can help justify income history and sustainability.

Other Lenders to Consider

Several lenders offer mortgages for self-employed individuals with varying requirements:

• Aldermore: Requires at least two years of accounting information but may consider one year under certain conditions.
• Beverley Building Society: Accepts self-employed applicants with one year of accounts up to 80% LTV.
• Bluestone: Considers one year’s accounts.
• Dudley Building Society: Offers mortgages up to 75% LTV.
• Foundation Home Loans: Requires a minimum of one year’s accounts.
• Halifax: Considers applications with one full year of trading but may require additional information.
• Kensington: Accepts one year of accounts, limited to 85% LTV.
• Mansfield BS: Considers one year of accounts on specific products.
• Newcastle Building Society: Offers special self-employed products with at least one year’s full accounts.
• Precise Mortgages: Accepts one year of self-employed accounts, provided the accountant has the correct qualifications.

Conclusion

Securing a Halifax mortgage for self-employed individuals can be complex, but with the right advice and support, it is achievable. By working with a specialist mortgage broker, you can navigate the process more effectively, ensuring you provide the necessary documentation and meet lender requirements. Whether you are a contractor, CIS worker, or umbrella company employee, there are mortgage options available to suit your needs.

FAQs – Halifax 1 year self employed mortgage

1. What documents are required for a self-employed mortgage application?

Typically, you need to provide tax calculations (SA302s), a tax year overview, and business bank statements. Some lenders may also ask for business accounts, proof of income, and financial records. Additional documents may be required depending on the lender and the type of property you are purchasing.

2. Can I get a mortgage with only one year of self-employment?

Yes, some mortgage lenders, including Halifax, consider applicants with one year of accounts, provided you meet other criteria such as consistent income history and a good credit rating.

3. How does a larger deposit affect my mortgage application?

A larger personal deposit can improve your chances of approval by reducing the loan-to-value (LTV) ratio, lowering the lender’s risk. This can also help you access better mortgage products and interest rates, including fixed-rate mortgages and tracker rate mortgages.

4. What credit issues can affect my mortgage application?

Defaults, CCJs, late or missed credit commitments, and a poor credit score can negatively impact your mortgage application. Regular credit checks and maintaining a good credit report are essential for securing better deals.

5. Why should I use a mortgage broker?

A qualified mortgage broker can help navigate the mortgage application process, assess your affordability, and recommend suitable mortgage products. They have access to a wide range of mortgage lenders, including specialist lenders not directly available to the public.

6. Are there special mortgage options for CIS contractors and umbrella company workers?

Yes, there are tailored options for CIS contractors and umbrella company workers, often with specific criteria regarding proof of income and employment history. These products may allow quicker access to the property ladder even with limited employment duration.

Additional FAQs

7. What is the role of affordability assessments in a mortgage application?

Lenders conduct an affordability assessment to calculate if your current income and additional income sources can support the monthly mortgage payments. This includes reviewing your regular income, business accounts (if self-employed), and any outstanding debts.

8. How do credit checks and credit scores influence lending decisions?

Credit checks are essential during the mortgage journey. Your credit score influences lending decisions by reflecting your financial responsibility. A higher credit rating can unlock better mortgage repayment terms and lower interest rates.

9. Can I apply for a joint mortgage if I’m self-employed?

Yes, self-employed workers can apply for joint mortgages. Lenders will assess both applicants’ income, including business owner income and salaried employees’ income, as part of the affordability calculation.

10. What is the difference between fixed-rate mortgages and variable mortgages?

Fixed-rate mortgages offer a stable interest rate for a set period, ensuring predictable monthly mortgage payments. Variable mortgages, including tracker rate mortgages, have interest rates that can change based on the Bank of England base rate or lender decisions.

11. Are there any ownership schemes available for first-time buyers?

Yes, several ownership schemes, such as shared ownership property options and equity schemes, help first-time buyers and key workers step onto the property ladder. These can reduce the required personal deposit and make homeownership more affordable.

12. What factors do lenders consider during the property valuation?

During a property valuation, lenders assess the condition of the property, its market value, and factors like property type—whether it’s a detached property, residential property, or commercial property. This ensures the property provides adequate security for the mortgage loan.