Self Employed Incomes

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The Government’s Self-Employed Income Support Scheme (SEISS) has offered grants since May 2020 to self-employed individuals with a loss in earnings due to Covid-19. We will continue to accept self-employed incomes which include SEISS grant income.

On 26 August 2021 we are making a change to how we calculate self-employed income to be used within our affordability model for customers whose income level indicates they would have been eligible for grants. This is to ensure that we have an accurate representation of income.

For any self-employed incomes where the income keyed for the ‘previous year’ is up to £50,000 the income used in affordability will be the lower of the last 2 year’s income figures.

Where the income in the ‘previous year’ is above £50,000 the income used in affordability will remain as the lower of the latest year or the average of the last 2 years.

It is whether the income keyed for the ‘previous year’, not ‘latest year’, is up to £50,000 or above £50,000 that will determine the calculation used.

Examples

Latest year: £60,000

Previous year: £40,000

Income to be used in affordability = £40,000 (income in previous year is below £50,000 so use lower of the last 2 year’s income figures).

Latest year : £60,000

Previous year: £55,000

Income to be used in affordability = £57,500 (income in previous year is above £50,000 so use lower of the latest year or average of the last 2 years i.e. will use average).

There is no change to how you should key incomes on an application and there is no change to our income verification requirements. There is no requirement to declare to us where SEISS grant income has been received.

We wish to continue to support self-employed customers who have taken grant income to maintain their previous level of income. Our approach means there are no changes to the verification documents we request and no requirement for further information from customers which may introduce delays into the application process.

The affordability changes apply to applications started from 26 August. Applications started before 26 August, even if at Decision in Principle (DIP) stage, will not be affected and will remain on the previous rules even if a full application is submitted after 26 August.

If you are using our website Mortgage Affordability Calculator you will need to determine which of the two affordability rules above will apply to know the income to key into the calculator.

We can still consider applications where a customer has only been trading for one year. Only the ‘latest year’ income figures are completed and affordability is based on the latest year. Further information may continue to be required to process the application where trading for less than 2 years.

The Criteria section of the Halifax Intermediaries website will be updated on 26 August.

Our tracker rate mortgages are linked to Bank of England bank rate (also known as Bank of England repo rate). Details of this rate can be found on the Bank of England website at www.bankofengland.co.uk.

For independent information on mortgages, visit the website 'Money Advice Service'.

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