Are Halifax Mortgages Strict?

Halifax is one of the UK’s largest mortgage lenders offering a wide range of mortgage products to suit different buyers’ needs. But are their lending criteria overly strict, making it hard to get a Halifax mortgage approved? Let’s take a look at some of the key factors

Halifax’s Typical Borrower Profile

Halifax is known for catering well to first-time buyers and low-income customers. They offer 100% LTV mortgages for those with limited deposits and have flexible lending criteria regarding credit history. This suggests they may not be as strict as some lenders when assessing applications from these groups.

However, for other borrowers, Halifax does have firm requirements that must be met. They particularly focus on:

• Affordability – Halifax thoroughly assess income and outgoings to ensure applicants can afford their mortgage repayments. They typically limit lending to 4.5 times an applicant’s income.

• Credit history – While Halifax may overlook minor credit issues, significant adverse credit can lead to declined applications. These include CCJs, IVAs, mortgage arrears and bankruptcies.

• Proof of income – Halifax requires extensive proof of stable reliable income. The self-employed must have 2 years of accounts.

• The property – Halifax are unlikely to lend if the valuation survey uncovers major issues with the property.

So while Halifax do cater to certain demographics, their criteria is still strict in many respects. Meeting their affordability and credit requirements is key for any applicant.

How Strict is Halifax Compared to Other Lenders?

Most major lenders have broadly similar lending criteria to Halifax. For instance, affordability assessments looking at 4-5 times income are typical across the market.

However, some areas where Halifax is known to be stricter than competitors include:

• Minimum self-employed trading time – Halifax require a minimum of 12 months, while other lenders may accept just 6.

• Letting rooms – Halifax often decline applicants wanting to let rooms via Airbnb. More flexible lenders are available.

• Guarantor mortgages – Halifax does not offer these, but they’re available from specialist lenders.

• Interest-only mortgages – Halifax lending on interest-only is restricted, while other lenders still offer this option.

• Retirement interest-only mortgages – Halifax does not offer retirement interest-only mortgages for older borrowers.

• Expat/overseas buyers – Halifax range is limited here, but expat specialists have flexible lending options.

So in certain niche cases, borrowers may find Halifax criteria too restrictive and other lenders more accommodating. But for typical residential buyers, their criteria are much like competitors.

Why Might Halifax Decline Your Mortgage Application?

There are various reasons why Halifax could reject a mortgage application, including:

• Affordability – If your income multiples are too high or expenditure too great.

• Credit history – CCJs over £500, IVAs, bankruptcies, mortgage arrears.

• Self-employed status – Under 12 months self-employed trading.

• Property issues – Major defects, unsuitable construction type, contamination.

• Insufficient trading time – Under 2 years of accounts if self-employed.

• Letting rooms – e.g. via Airbnb.

• High LTV – Insufficient deposit for amount borrowing.

• Retirement age – Over 80 when mortgage term ends.

• Unverified income source – Income not proven to lender’s satisfaction.

• Excessive gambling – Evidence of problem gambling.

• Guarantor request – Halifax does not offer these.

Clearly, Halifax has limits in place meaning those who fall outside their criteria may face declined applications. Specialist lenders can sometimes help in these situations.

Tips for Improving Your Chances with Halifax

If you want the best chance of Halifax mortgage approval, consider these tips:

• Boost your credit score – Give yourself time to improve any credit issues before applying.

• Increase your deposit – The higher the LTV, the more scrutiny lenders apply.

• Reduce debts – This will improve affordability assessment.

• Extend your mortgage term – Lower monthly payments help affordability.

• Use a broker – An expert broker can negotiate with lenders and highlight your strengths.

• Provide comprehensive proof of income – Give Halifax everything they need to evidence earnings.

• Choose mainstream property – Avoid anything potentially problematic for the lender.

Meeting Halifax criteria where possible shows you are a lower risk. But even if they do still decline you, a good broker can often find other lenders to consider your application.

What if Halifax Decline Your Application?

If Halifax does reject your mortgage application, don’t panic. Here’s what to do next:

• Don’t reapply immediately – Too many applications in a short period can damage your credit file.

• Understand the reasons – Ask Halifax for a full explanation so you can address any problems.

• Review your credit file – Check for any unexpected issues Halifax may have uncovered.

• Use a broker – An expert intermediary can negotiate with lenders and find alternative options.

• Improve your application – Enhance your credit score, grow your deposit, reduce debts.

• Provide more evidence – Give comprehensive proof of income if this was an issue.

• Consider specialist lenders – They may have more flexible criteria to suit your needs.

With some focused work on your application – and expert broker advice – Halifax’s rejection does not have to be the end. There are often other ways to structure your application or different lenders to explore.

While Halifax does have firm lending criteria that must be met, this is common across the wider mortgage market. In many respects their requirements are no stricter than competitors. However, for more niche cases such as self-employed applicants they can be less flexible. Understanding their key requirements around affordability and credit history is important. A broker can advise if Halifax is likely to be the right lender for you, or if others may be more suitable. With the right support, a Halifax rejection does not have to spell the end of your homeowner dreams.