For many self-employed professionals and contractors in the UK, securing a mortgage can be challenging, especially if they have less than two or three years of trading history. Most high street lenders require at least two years of accounts, making it difficult for those who have recently transitioned into self-employment. However, Halifax is one of the few lenders that offers a 1-year self-employed mortgage, making homeownership more accessible for freelancers, contractors, and small business owners.
This guide explains how self-employed individuals can qualify for a Halifax 1-year self-employed mortgage, what criteria they need to meet, and how to improve their chances of approval. If you have been running your business for at least a year and are looking for a mortgage, this blog will help you understand your options.
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Can You Get a Halifax 1-Year Self-Employed Mortgage?
Yes, Halifax offers mortgages to self-employed applicants with only one year of trading history, which is uncommon among major lenders. Most mortgage providers prefer at least two to three years of accounts to assess income stability. Halifax, however, evaluates applications based on one year’s worth of income records, making it an attractive choice for newly self-employed professionals.
Applicants must demonstrate stable earnings, industry experience, and a reliable financial profile to qualify. Those transitioning from employment to self-employment in the same industry often have a higher chance of approval, as lenders view them as lower risk.
Why Is It Hard for Self-Employed Contractors to Get a Mortgage?
Self-employed applicants face more scrutiny than salaried employees because their income is often irregular. Lenders assess financial risk and prefer applicants with predictable earnings. Contractors and freelancers may struggle due to fluctuating revenue, tax-efficient earnings that reduce taxable income, and the lack of long-term accounts to prove financial stability.
Despite these challenges, Halifax provides a mortgage solution that caters specifically to self-employed individuals who have been trading for just 12 months. Working with a specialist mortgage broker can further increase approval chances, as they know how to structure applications in a way that appeals to lenders.
Who Qualifies for a Halifax 1-Year Self-Employed Mortgage?
Halifax has specific requirements for self-employed applicants seeking a mortgage with just one year of trading history. The key criteria include:
One Year of Trading History
Applicants must have been self-employed for at least 12 months and be able to provide one full year of HMRC tax returns (SA302) or company accounts.
Industry Experience
Lenders are more likely to approve applicants with prior experience in their industry. For example, if an individual was previously employed as an IT consultant and then started their own IT consultancy business, they are seen as lower risk compared to someone who switched careers entirely.
Income Assessment Based on Salary and Dividends or Net Profit
For limited company directors, Halifax considers salary and dividends. Sole traders and partnerships are assessed based on net profit. Ensuring that income is properly documented and reflects affordability is crucial for mortgage approval.
Good Credit History
A strong credit score improves the likelihood of mortgage approval. Halifax assesses creditworthiness, outstanding debts, and financial reliability when reviewing applications.
How Much Can You Borrow with a Halifax 1-Year Self-Employed Mortgage?
Halifax typically lends 4.5 to 5 times the annual declared income for self-employed applicants. The exact amount depends on factors such as income level, credit history, deposit size, and overall financial stability.
For example, an applicant earning £50,000 per year as a self-employed contractor may qualify for a mortgage between £225,000 and £250,000. Those with higher earnings and larger deposits may secure even better mortgage terms.
What Documents Are Required for a Halifax Self-Employed Mortgage?
Self-employed applicants must provide detailed financial records to prove income stability. Halifax requires:
Identification and Address Verification
A valid passport or driving licence, along with proof of address such as a recent utility bill or bank statement, is needed.
One Year’s SA302 Tax Calculation and Tax Year Overview
Since Halifax accepts self-employed applicants with one year of accounts, submitting a recent SA302 from HMRC is mandatory.
Business Accounts Prepared by a Certified Accountant
Limited company directors should provide company accounts, while sole traders must submit self-assessment tax returns showing net profit.
Bank Statements Showing Business and Personal Transactions
Halifax may request the last three to six months’ bank statements to verify income consistency and spending habits.
Deposit Proof and Existing Financial Commitments
Providing evidence of deposit funds and details of existing loans or credit commitments helps Halifax assess affordability.
Halifax Mortgage Products for Self-Employed Borrowers
Halifax offers a range of mortgage options for self-employed individuals with one year of trading history. These include:
Fixed-Rate Mortgages
Halifax provides 2, 3, 5, and 10-year fixed-rate mortgage deals, offering stability in monthly payments.
Tracker Mortgages
A 2-year tracker mortgage follows the Bank of England base rate, meaning repayments can fluctuate based on market conditions.
Interest-Only Mortgages
Available to eligible self-employed applicants, an interest-only mortgage requires a repayment plan for the principal amount.
Halifax applies the same mortgage products and interest rates to self-employed and employed applicants, ensuring fair access to home financing.
How to Improve Your Chances of Getting Approved
Work with a Mortgage Broker
Specialist mortgage brokers understand lender requirements and can match self-employed applicants with the best mortgage deals.
Increase Your Deposit
A larger deposit reduces the lender’s risk and can help secure lower interest rates.
Maintain a Good Credit Score
Checking credit reports for errors and repaying debts on time can strengthen an application.
Provide Accountant-Proofed Financial Projections
Having a certified accountant prepare financial statements can help demonstrate income stability, particularly for newly self-employed individuals.
Use Our Mortgage Calculator to Find Out How Much Can You Borrow!
How Contractor Mortgage Solutions Can Help
Applying for a Halifax 1-year self-employed mortgage without expert guidance can be challenging, especially when providing the right documentation. At Contractor Mortgage Solutions, we specialize in securing mortgages for self-employed professionals and contractors in the UK. Our team helps applicants:
- Navigate Halifax’s mortgage application process smoothly.
- Maximize borrowing potential by structuring income appropriately.
- Find the most competitive mortgage rates available.
If you have been self-employed for just 12 months and need expert advice, contact us today to start your mortgage journey.