Halifax contractor mortgage (A review)

In this brief guide we are going to discuss the  Halifax contractor mortgage

Halifax contractor mortgage

Halifax does offer a contractor mortgage which allows contractors to get on the property ladder. Halifax states that it will consider applications from contractors who have fFixed Term/Short Term Contracts, if the contractor has a  current continuous employment of 12 months or more within 6 months of the contract remaining or has (or has had) 2 years continuous service in the same type of employment. 

Halifax will request to see your CV, employment history and if you pay your own taxes or subcontract to one company then Halifax will treat you as self-employed.

Halifax contractor mortgage product details

2 year fixed at 2.99%

Up to 90% loan to value (LTV)

available to first time buyers only

Maximum loan size is £750,000

No arrangement fee

2 year fixed at 2.99%

Up to 90% loan to value (LTV)

available to first time buyers only

Maximum loan size is £750,000

£999 arrangement fee

£1000 cashback

Below is a quick summary of the Halifax contractor mortgage requirements:

“Halifax will accept the gross value of your current contract as evidence of income;

Halifax lending criteria doesn’t ask for any minimum daily rate for IT contractors;

Non-IT contractors must earn at least £312.50 per day;

Contractors on their first contract must have history in the same profession for at least 2 years;

At the time of application, the borrower must have at least 4-6 weeks left to run on their contract. If not, they must provide evidence of a contract renewal/extension;

An up-to-date CV is mandatory, outlining your employment and contracting history;

Halifax underwriters don’t like to see more than a 6-week gap between contracts;

Gross annual income (for lending purposes) calculated as Daily Rate x 5 (days) x 48 (weeks).”

Halifax contractor mortgage criteria

Below is the criteria you will need to meet if you want a Halifax contractor mortgage.

Halifax says

 “Contractors

Sub Contractors, Fixed/short term contracts and Agency workers

Applications will be considered from the above employment types if the customer has a current continuous employment of 12 months or more with 6 months of the contract remaining or the customer has 2 years continuous service in the same type of employment.

Evidence of their employment track record may be required.

Customers should be treated as self employed if they pay their own tax or sub contract to more than one company.

IT and other contractors

For IT contractors on any income and other contractors whose income is more than £500 per day or £75,000 per annum: whether employed or self employed, we accept the gross value of the contract as evidence of income. All applicants must have a current continuous employment of 12 months or more with 6 months of the contract remaining or 2 years continuous service in the same type of employment.

The customer should be treated as self employed if they have more than one contract, or where they have set up a limited company and employ other contractors.

Construction Industry Scheme Contractors (CIS)

Applications from customers employed on a Construction Industry Scheme (CIS) Contract will be considered. An average of the latest 3 months income should be used and evidence of the income for these applicants must be provided.

Customers should be treated as self employed if they pay their own tax or sub contract to more than one company.

See more details of the criteria in the Self Employed/Contractors Income Table.

Zero hours contracts

Applications from customers employed on a zero hours contract will be considered. The total of the last 12 calendar months income only will be used and all the income must be evidenced.

Income Type	Acceptable?	Main or Other	Treat As	Evidence
Contractor – If applicant earns more than £500 per day or £75,000 per annum – providing 12 months or more continuous employment with 6 months of contract remaining OR 2 years continuous service (for the last 2 years at the date of the application) in the same type of employment	Yes	Main	Basic Annual Income	Copy of the contract

Contracts – Fixed / Short / Temporary – If Company Paying Tax (Excluding CIS contractors) – providing 12 months or more continuous employment with 6 months of the contract remaining OR 2 years continuous service (for the last 2 years at the date of the application) in the same type of employment

Yes

Main

Basic Annual Income

Latest payslip

Contracts Fixed / Short / Temporary – If Customer Paying Tax	Yes	Self Employed	See Self Employed Applicants	Last 2 years Tax Calculations and corresponding Tax Year Overviews or Business / Company accounts Where the customer has been trading for less than 2 years, a minimum of 1 year’s accounts will be considered.
IT Contractors – providing 12 months or more continuous employment with 6 months of the contract remaining OR 2 years continuous service (for the last 2 years at the date of the application) in the same type of employment	Yes	Main	Basic Annual Income	Copy of the IT Contract
CIS Contractors – If Company Paying Tax key as employed providing 12 months or more continuous employment with 6 months of contract remaining OR 2 years continuous service (for the last 2 years at the date of the application) in the same type of employment	Yes	Main	Basic Annual Income	Latest three consecutive months payslip/invoices (this applies whether the applicant is paid weekly or monthly) and three months corresponding bank statements. P60/Payslips If no income is received or the customer is unable to provide evidence of income then ‘zero’ incomemust be used for that month.
CIS Contractors – If Customer Pays Own Tax or has more than one contract or is employed by Ltd company he/she has set up then treat as Self Employed	Yes	Self Employed	See Self Employed Applicants	Last 2 years Tax Calculations and corresponding Tax Year Overviews or Business / Company accounts Where the customer has been trading for less than 2 years, a minimum of 1 year’s accounts will be considered.” “

Which banks give mortgages to contractors?

The below banks offer contractor mortgages.

Halifax

Metro

Clydesdale

Leeds building society

Kensington

The list above may have now changed, you should speak with your mortgage broker to see what banks offer contractor mortgages such as the Halifax contractor mortgage at the time of your mortgage application.

Government help for contractors

When looking to get a halifax contractor mortgage or any other similar mortgage product you may be able to get government help in order to get on the property ladder faster if you are a contractor.

Some government schemes may be able to help you save up a mortgage deposit whilst others may be able to help you reduce the cost of the property you are trying to buy.

You can view some of the government schemes which are available here:

• Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
• Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
• Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
• Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
• Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
• Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
• Right to buy- allows you to buy your home at a discount price.
• Preserved right to buy– same as above.
• Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

How to apply for a Halifax contractor mortgage?

To apply for a Halifax contractor mortgage you may want to first contact a mortgage broker.

Mortgage brokers are important as they can access  contractor mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which Halifax contractor mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. This will allow you to shop for your home easier as more estate agents and sellers may take you seriously. Once you have found a home you want to buy the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your Halifax contractor mortgage with the help of a conveyancer.

In this brief guide we discussed the Halifax contractor mortgage. If you have any questions, let us know.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.