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Introduction
Securing a mortgage as a self-employed professional or contractor is often tougher than for employees, as many lenders require at least two years of trading history.
However, Halifax remains one of the few mainstream lenders that may consider applications with only one full year of accounts under specific conditions. With recent updates to how Halifax assesses self-employed income and increased underwriting scrutiny, it’s crucial to understand how to approach this kind of application strategically.
This guide walks you through:
- Halifax’s self-employed mortgage policy (1-year case)
- Updated income calculation rules
- Eligibility criteria and required documentation
- How much you might borrow
- Expert tips to strengthen your application.
Let’s dive in.
Halifax’s Self-Employed Mortgage Policy: What You Need to Know
Halifax is among the more flexible mainstream UK lenders when it comes to mortgages for self-employed individuals. Understanding their current policy is vital so that you or your clients can prepare a stronger submission. Below is a breakdown of the latest policy elements, how Halifax measures income, and what increases your chances of success.
Does Halifax Accept 1-Year Self-Employed Cases?
Yes, Halifax’s guidance confirms that while they prefer two years’ accounts as proof of stable income, mortgage approval is still possible with one year of trading under the right conditions.
On 17 October 2023, Halifax updated its income assessment for self-employed borrowers earning up to £50,000. They may now use the lower of the latest year’s income or the average of the two years for affordability calculations.
They still require SA302s and tax year overviews from the most recent year for new applications to verify income. Halifax explicitly recognises one-year trading histories under their 1-Year Self-Employed Mortgage pathway.
While two-year evidence remains the standard, Halifax’s policy does allow one-year cases — provided the income is stable, credible, and professionally documented.
RULES
Income Assessment & Affordability Rules
How Halifax calculates your income directly affects how much you can borrow. Their approach varies depending on your business structure.
For Sole Traders & Partnerships
Halifax reviews the net profit declared on your SA302, requiring at least one full year of accounts from the most recent tax year (e.g., 2022/2023 or later). They look for consistency in profits year over year, and evidence of future or ongoing contracts can help strengthen your application.
For Limited Company Directors
Halifax considers both salary and dividends when assessing overall income. Retained or undistributed profits are typically excluded from affordability calculations. Applicants must provide full company accounts, recent dividend records, and written confirmation from their accountant to verify income consistency and business stability.
Lower-of-Latest vs Two-Year Average Rule
Under the updated Halifax self-employed policy, if your income is up to £50,000, the lender may use the lower of:
- The most recent year’s income
- The average of the last two years’ income.
This policy applies where income is up to £50,000 and at least one previous year’s figures exist. For applicants with only one year of trading, the latest year’s figure is usually used.
This approach provides a safety buffer for income volatility, but if your latest year’s income is lower, your assessed income — and thus borrowing potential — may be conservative.
Additional Criteria & Policy Considerations
Beyond income, Halifax underwriters assess multiple factors:
Employment Continuity & Relevant Experience
If you’ve previously worked in PAYE within the same field before becoming self-employed, Halifax may view you more favourably. Remaining in the same industry and demonstrating client continuity can help mitigate perceived risk.
Document & Evidence Requirements
Applicants must provide:
- SA302s and tax year overviews
- Business accounts / profit & loss statements
- Bank statements
- Proof of contracts, recurring clients, or pipeline work
- ID and address proof
- Prior employment payslips or P60s (if relevant)
Halifax’s self-employed mortgage guide outlines these requirements in detail.
No Self-Employed Premium on Mortgage Products
Halifax does not offer separate “self-employed mortgage products.” Self-employed applicants have access to the same rates and products as employed borrowers, including fixed, tracker, and repayment options.
If your case is strong, you’re not penalised with higher rates simply for being self-employed.
Underwriter Discretion & Higher Scrutiny
Because one-year trading histories are considered higher risk, underwriters will scrutinize anomalies, fluctuations, or income gaps closely. They may query large deductions, unusual expense lines, or inconsistent deposits.
Submissions should be well-packaged and supported with explanatory notes to reduce friction.
Why This Policy Matters for You
Understanding Halifax’s self-employed mortgage policy gives you a significant advantage:
You’ll know which business structure (sole trader vs limited company) offers the clearest path, anticipate how your income will be assessed, plan your finances accordingly, prepare documentation in advance, and manage expectations realistically, particularly for one-year trading cases.
Who Can Apply? (Eligibility Criteria)
Understanding Halifax's self-employed mortgage policy gives you a significant advantage; You'll know which business structure (sole trader vs limited company) offers the clearest path, anticipate how your income will be assessed, plan your finances accordingly, prepare documentation in advance, and manage expectations realistically — particularly for one-year trading cases.
| Requirement | What Halifax / Intermediaries Expect | Additional Notes |
|---|---|---|
| Trading History | At least 12 full months of business trading. | Less than one year is unlikely to be accepted. |
| Income Evidence | SA302(s) and Tax Year Overview(s) for your business income. | Shows declared income or profit to HMRC. |
| Income Calculation Rule | For incomes £50,000, the lower of the latest year or the average of the last two years is used. | Beneficial if your business is growing. |
| For Limited Company Directors | Salary + dividends (retained profits excluded). | Dividend records and full accounts required. |
| For Sole Traders / Partnerships | Net profit after allowable expenses. | Avoid excessive deductions that reduce taxable profit. |
| Credit Profile | Clean credit history preferred (no recent defaults, CCJs, or serious issues). | Minor issues may be mitigated with explanation. |
| Deposit / LTV | Larger deposits improve acceptance odds. | Lower LTVs are safer for one-year accounts. |
| Supporting Evidence | Forward projections, contracts, previous employment in the same field, client pipeline. | Continuity of income strengthens your case. |
Note: Halifax still generally prefers two years of accounts. The one-year route is an exceptional pathway, not a guaranteed approval.
How Much Can You Borrow? (Affordability & Multiples)
Your borrowing limit depends on verified income, business stability, and financial health. Halifax applies an affordability model rather than a fixed formula to determine what you can reasonably afford to repay.
Typical Income Multiples Halifax Uses:
Halifax typically offers borrowing of up to around 4.5× your annual income, though this can vary. For higher earners with excellent credit and minimal debt, borrowing may stretch to 5× income in select cases.
These figures are not guaranteed, Halifax’s affordability calculator also considers your outgoings, credit score, dependents, and monthly commitments.
How Halifax Assesses Self-Employed Income:
For self-employed applicants, Halifax uses income verified through SA302s and Tax Year Overviews.
If you’ve traded for two or more years, they’ll take the average of your last two years’ net profits (for sole traders) or salary plus dividends (for directors).
If you’ve traded for one year only, Halifax may use your latest year’s income, but with closer underwriting scrutiny.
Key Factors That Impact Affordability:
- Credit score
- Deposit size (15–25%+ preferred)
- Existing commitments (loans, cards, childcare, etc.)
- Business stability (renewable contracts, steady clients)
- Dependents and household size
Using Halifax’s Affordability Calculator:
Halifax’s online calculator offers a general estimate but does not fully reflect self-employed nuances. Speak with a whole-of-market mortgage broker who understands Halifax’s criteria to interpret results accurately.
Example Scenarios (for Guidance Only):
- Case 1: Sole Trader (1-Year Trading) – Income £60,000, Deposit 20% → Borrowing £240,000–£270,000
- Case 2: Limited Company Director (2 Years) – Income £90,000, Deposit 10% → Borrowing £380,000–£420,000
(Actual borrowing depends on underwriting, credit score, and commitments.)
Pro Tip:
Ensure your latest tax return and HMRC overviews are up to date. Halifax requires your most recent completed tax year (e.g., 2022/2023 or later). Consistent, clean documents make a big difference.
Application Process & Typical Timeline
Initial Assessment & Pre-Check
Speak with a specialist broker such as Mortgage-Tek. They’ll review your income, credit, and deposit to assess your eligibility under Halifax’s latest rules.
Document Gathering & Submission
Prepare your SA302s, Tax Overviews, bank statements, and ID proof. Your broker will compile a submission pack with:
- A cover summary of your business background
- Indexed documents
- Explanations for any fluctuations
A well-presented case helps underwriters decide faster.
Decision in Principle (DIP / AIP)
Halifax can issue a Decision in Principle (DIP) based on your profile, a useful pre-approval when making property offers.
Full Application & Underwriting
Once you find a property, your broker submits the full application. Halifax’s underwriter reviews all documents, valuations, and financials. They may request clarifications or updated statements.
Offer & Completion
Upon approval, Halifax issues a formal mortgage offer. Review details (rate, term, fees) with your solicitor. Once completed, Halifax releases funds to your solicitor, and your monthly repayments begin.
Typical Timeline:
Most Halifax self-employed cases take 6–10 weeks from application to completion, depending on complexity and valuation turnaround.
Tips to Improve Your Approval Odds
Engage a Specialist Broker Early
Partner with a whole-of-market broker who understands Halifax criteria and can structure your application strategically.
Increase Your Deposit
Aim for a deposit of 15–20% or higher to reduce perceived lender risk and access better mortgage rates.
Maintain a Strong Credit Profile
Keep your credit record clean by avoiding new borrowing and paying off existing balances on time.
Provide Forward-Looking Evidence
Include signed future contracts or accountant projections to demonstrate consistent income stability and reassure lenders of long-term potential.
Explain Income Irregularities
Clearly outline reasons for seasonal fluctuations or start-up expenses to help underwriters understand income variations and assess stability confidently.
Time Your Application Wisely
Apply right after submitting your latest tax return so lenders see your most up-to-date financial records.
Submit a Well-Packaged Case
Present an organised, complete application to make the review process smooth and increase your approval likelihood.
How Much Can I Borrow Calculator
Use our free calculator to quickly estimate how much you could borrow based on your income. On this page, you’ll also find helpful information about mortgage eligibility and what lenders are looking for. Whether you’re employed, self-employed, a company director, a locum, or retired, At MortgageTek, we’re here to help you understand your borrowing potential and move forward with confidence.
Your Estimated Borrowing Amount
How Mortgage-Tek Can Help You Secure a Self-Employed Mortgage
Getting a mortgage while self-employed can seem daunting, but it’s entirely achievable with expert guidance.
At Mortgage-Tek, we’ve helped countless self-employed individuals, contractors, and limited company directors secure Halifax mortgages, even with just one year of trading. Our team understands Halifax’s assessment process, allowing us to prepare applications that meet their expectations and reduce friction.
Whether you’re newly self-employed or have been trading for several years, we’ll help you find the right product from Halifax and other leading UK lenders.
We guide you through every stage, from pre-assessment to completion, ensuring your application is strong, compliant, and positioned for approval.
Halifax Contractor Mortgage – Frequently Asked Questions (FAQs)
How long do I need to have been contracting to apply?
Generally, Halifax prefers contractors with at least 12 months of contracting experience and a current contract lasting at least 6 months. However, exceptions can be made if you have a strong previous employment record in the same field. Contractors with consistent renewals or minimal gaps between contracts are viewed more favourably.
Can contractors get a mortgage with Halifax?
Yes, Halifax is one of the most contractor-friendly lenders in the UK. They consider contract-based income instead of traditional accounts or payslips, making it easier for professionals working through limited companies or on fixed-term contracts to qualify. Their underwriting approach focuses on your day rate, contract length, and industry stability rather than your trading history alone.
How does Halifax calculate contractor income?
Halifax uses a simple formula to assess contractor income:
Day rate × 5 (days per week) × 48 (weeks per year).
For example, if you earn £400 per day, your annualised income would be £400 × 5 × 48 = £96,000. This figure is then used to determine your borrowing capacity, typically up to 4.5–5× your assessed income depending on credit and affordability.
What documents do I need for a Halifax contractor mortgage?
You’ll need:
- A copy of your current contract (and possibly your previous one).
- Recent bank statements showing contract payments.
- Proof of ID and address.
- CV or evidence of work history showing continuity in your field.
Unlike many lenders, Halifax typically doesn’t require full company accounts or tax returns if your contract income can be clearly verified.
Are rates higher for contractor mortgages with Halifax?
Not necessarily. Halifax offers the same product range and competitive rates available to employed borrowers. Your rate depends more on your deposit size, credit profile, and loan-to-value (LTV) ratio than your contractor status. Contractors with strong financials can access mainstream deals similar to permanent employees.
Can first-time buyers who are contractors get approved with Halifax?
Absolutely. Halifax welcomes first-time buyers working as contractors, provided they meet income and contract criteria. Partnering with a specialist broker like Mortgage-Tek can significantly improve your approval odds, as we understand how to structure and present your application to meet Halifax’s underwriting expectations.