HSBC changes income policy for self-employed mortgage borrowers

by Aaron Strutt

Aug 09 2021

HSBC for Intermediaries has made changes to the documents self-employed borrowers need to provide to secure a mortgage. 

The lender no longer requires statements from January, February or March 2020 along with the latest 60 days’ statements. These additional documents were required to understand how companies coped during the pandemic.

With effect from Monday 9th August HSBC will require the following documents from self-employed applicants: 

Sole Traders, Partnerships and LLPs with less than 200 partners 

• Last two years Tax Calculations and corresponding Tax Year Overviews. 
• The latest three months’ worth of business bank statements (or personal account statements if used for business purposes) of which the latest must be dated within 35 days of the application. The business bank statements should include the monthly summary sheet detailing the total credits and debits for the month. 
• Last two years SA100s (tax returns) and the SA103 supplements. 

For limited Company Directors  

• Last two years finalised accounts of which the latest of which must be dated within the last 18 months. 
• The latest three months’ worth of business bank statements (or personal account statements if used for business purposes) of which the latest must be dated within 35 days of the application. The Business Bank Statements should include the monthly summary sheet detailing the total credits and debits for the month. 

How HSBC assesses self-employed applications 

HSBC is also changing the way it assesses self-employed mortgage applications to ensure the income used in the affordability assessment is suitable: 

If the customer has submitted their financial accounts or tax returns after the 30th September 2020, the bank will deduct any grants and loan repayments, to give us an adjusted net profit position. 

Alternatively, it will consider net profit from the previous year, deducting any grants and loan repayments and adjusting net profit based on current trading levels. 

If the borrower has submitted their financial accounts/tax returns before the 30th of September 2020, then HSBC will deduct any grants and loan repayments and adjust net profit based on current trading levels.

Is it easier to get a self-employed mortgage? 

The banks and building societies are starting to return to normality following the pandemic. HSBC's changes put it in line with many of its competitors. 

Aaron Strutt, product director at Trinity Financial, says: "Some lenders are taking longer than others to assess self-employed applications. For example, Santander it taking on average 18 days for employed borrowers, rising to 26 days for the self-employed. Self-employed applicants will need a 25% deposit." 

Call Trinity Financial to secure a mortgage on 020 7016 0790 or book a consultation.