Being self-employed can make obtaining a mortgage a bit more challenging compared to employed applicants. Mortgage lenders typically want to see a track record of earnings, often requiring two or three years of accounts. However, there are a small number of lenders that will consider applicants with just one year of accounts, and Halifax is one of the most notable among them.

This guide explains all you need to know about getting a Halifax mortgage with one year’s accounts. We cover the specific criteria you need to meet, how to prepare your financial documents, and what to expect during the application process.

Understanding self employed mortgages & the challenges 

Securing a mortgage as a self-employed individual can be more complex than for employed applicants. Lenders typically want to see stability and a history of earnings, usually requiring two or three years of accounts. They often average the last two years’ earnings if they are on a level or increasing trend. If earnings are decreasing, lenders may base their decision on the most recent year’s earnings, which can be challenging for new businesses that might fluctuate in their early years.

One of the key issues for self-employed individuals is that businesses are often run to be as tax-efficient as possible. This might involve minimising personal drawings from the company or maximising expenses by offsetting them, which can reduce the apparent income. As a result, this can affect borrowing capacity, as lenders typically base their calculations on personal drawings from the company or, in some instances, the business profit.

Which Lenders Offer One Year Self-Employed Mortgages?

There is a relatively small pool of lenders that consider applicants with only one year of self-employed accounts. The vast majority of these lenders are generally specialist lenders who often have much higher rates than high street lenders. 

However, Halifax is one of the few main high street lenders that offer mortgages to applicants with just one year of self-employed accounts. This makes Halifax a notable option for self-employed individuals seeking competitive mortgage rates and terms.

Halifax 1 year self employed criteria 

To qualify for a Halifax mortgage with only one year of self-employed accounts, you need to meet several specific criteria:

  • At Least One Year of Trading: You must have been trading for at least one year.
  • Income Calculation: Halifax will use the salary and dividend figures from either the accounting year or the financial year.
  • Relevant Experience: It helps if you have experience in your line of work. For example, an experienced employed plumber becoming a self-employed plumber has a better chance of approval than someone switching careers, like an estate agent becoming a builder.
  • Accountant Projections: Providing projections from your accountant can significantly enhance your application. Lenders want to see that the first year of trading wasn’t an anomaly and that it is plausible for you to earn the same amount in the following year. Projections can demonstrate the sustainability and potential growth of your earnings, improving your chances of success.

Meeting these criteria can help you secure a mortgage from Halifax even with only one year of self-employed accounts.

How much can I borrow? 

With a Halifax mortgage for self-employed individuals with one year of accounts, you can typically borrow between 4.5 to 5 times your income. The exact amount will depend on factors such as your credit score, income, and deposit. In some cases, it may be possible to borrow more than 5 times your income if you have high earnings and a large deposit.

For example, if your salary and dividends total £50,000, and you are offered a 4.5 multiple, you may be able to get a mortgage of £225,000. However, higher multiples and loan amounts are subject to stricter criteria and are more likely if you have a strong overall financial profile.

 Benefits of a Halifax One Year Self-Employed Mortgage

Halifax offers several benefits for self-employed individuals with one year of accounts seeking a mortgage:

  • High Street Rates: Unlike most lenders that require only one year of accounts and charge higher rates, Halifax offers competitive high street rates.
  • Streamlined Process: Halifax provides a streamlined and quick process with efficient underwriting and fast turnaround times.
  • Minimal Documentation:The documentation requirements are minimal compared to other specialist lenders, simplifying the application process.
  • Wide Product Range: Halifax offers a wide range of mortgage products, allowing you to choose the one that best suits your needs.
  • Flexible Terms: Halifax provides flexible terms to accommodate various financial situations.
  • Good Customer Service: Halifax is known for its excellent customer service and positive feedback from borrowers.

These benefits make Halifax a strong contender for self-employed individuals looking for a mortgage with only one year of accounts.

 Required Documents for a Halifax One Year Self-Employed Mortgage

When applying for a Halifax mortgage with one year of self-employed accounts, you will need to provide the following documents:

  • Identification: Valid ID such as a passport or driver’s licence.
  • Proof of Address: Recent utility bills or bank statements showing your current address.
  • One Year’s SA302: Your HMRC SA302 tax calculation for the most recent year.
  • Company Accounts: A summary of your company’s accounts for the last year.
  • Accountant Projections: Projections from your accountant to demonstrate the sustainability of your income. These are highly beneficial for your application.
  • Evidence of Previous Earnings: Proof of earnings before becoming self-employed, such as payslips or P60s.
  • Deposit: Proof of the deposit you intend to use for the mortgage.

Providing these documents will help streamline your mortgage application process with Halifax.

Rates & Products Available for Halifax One Year Self-Employed Mortgage

Halifax offers the same competitive rates and mortgage products to self-employed individuals with one year of accounts as they do for other borrowers. These include 2, 3, 5, and sometimes 10-year fixed rate mortgages, which provide stability with set monthly payments. Additionally, Halifax offers 2-year tracker mortgages, which track the Bank of England base rate. The 

rates for these products are very competitive, providing a range of choices to suit different financial needs and preferences.

 Self-Employed Mortgage Application Process

To apply for a self-employed mortgage with Halifax, follow these steps:

  • Gather Documents: Collect all necessary documents, including proof of income (such as SA302s), an overview of company accounts, identification, and proof of address. It helps to speak with your accountant beforehand if you need assistance understanding or preparing your financial information.
  • Book Appointment with Broker: Schedule an appointment with a mortgage broker who can review your options and guide you through the process.
  • Review Options: With your broker, review the available mortgage options that best fit your financial situation and needs.
  • Agreement in Principle (AIP) Obtain an AIP from Halifax to understand how much you can borrow and to demonstrate your borrowing capacity to sellers.
  • Property Search: Begin searching for a property within your budget.
  • Full Mortgage Application: Once you find a suitable property, submit a full mortgage application with all required documentation.
  • Underwriting and Mortgage Offer: The lender will underwrite your application, and if approved, you will receive a formal mortgage offer.

 How to Improve Chances of Success with One Year of Accounts at Halifax

  • Work with Your Accountant: Understand the trade-offs between tax efficiency and mortgage affordability to present your financial situation effectively.
  • Check Your Credit Score: Improve your credit score if necessary to increase your attractiveness to lenders.
  • Increase Your Deposit: A larger deposit helps with affordability and can secure better rates.
  • Maintain Good Account Conduct: Ensure consistent money flow through your business accounts and minimise cash transactions.
  • Prepare Accountant Projections: Demonstrate the sustainability and potential growth of your income to strengthen your application.

How Can Strive Help?

At Strive, we provide expert guidance throughout the mortgage application process for self-employed individuals. We help you prepare the necessary documentation and work with your accountant to present your financial situation effectively. Our team assists in improving your credit score, increasing your deposit, and maintaining good account conduct to enhance your mortgage application.

We also offer personalised advice to find the best mortgage products and rates. We guide you through securing an Agreement in Principle (AIP) and support you during the full mortgage application process, including liaising with lenders and underwriters. With Strive, you have a dedicated partner to navigate the complexities of securing a mortgage with one year of self-employed accounts.

FAQ’s

  • Do Halifax Offer One Year Accounts Mortgages? Yes, Halifax offers mortgages to self-employed individuals with just one year of accounts.
  • Do I Need Two Years of Accounts to Get a Mortgage? While many lenders require two years of accounts, Halifax can consider applications with only one year of accounts.
  • Do I Need Three Years of Accounts to Get a Mortgage? You do not necessarily need three years of accounts to get a mortgage. Halifax can consider applicants with just one year of accounts, although having more years of accounts may improve your chances with other lenders.

Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.

For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.